The procedure for obtaining a loan continues to tighten as the banks, investors, and HUD figure out how best to insure that jumbo mortgages are secure investments. The US Department of Housing and Urban Development (HUD) announced on April 1, 2008 that jumbo mortgages (loans exceeding the conforming loan limit of $417,000) may require 2 appraisals in order for a buyer to obtain a loan commitment. According to the HUD Mortgagee Letter, a 2nd appraisal may be required when 3 requirements are met:
- The loan amount, excluding the upfront mortgage insurance premium, will exceed $417,000, and
- The Loan-to-Value equals or exceeds 95%, and
- The property is determined as being in a declining market. A declining market is determined by either the appraiser or the lender.
Every time I speak with one of our lenders, it seems there are more and more changes that need to be understood and incorporated into the mortgage approval process. However, this is probably a good change… though it could slow down or add additional cost to the process. I find myself counseling our buyers that there is a little bit of a learning curve as everyone becomes more familiar with the sweeping changes that have taken place in the mortgage industry.