How Is An FHA Mortgage Funded?

 

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How is an FHA mortgage funded?  Well an FHA mortgage is funded the same way as any other conventional loan.  The only difference between an FHA mortgage and a conventional mortgage is the FHA provides insurance to who the lender is.  And so there’s extra paperwork.  So the money still comes from whatever lender wishes to lend you the money.  And in this day and age of high finance, once you get a mortgage from let’s say Bank of America, SunTrust, Wells Fargo, Regions or any of the other large lending institutions, they usually will sell the loan to the secondary market which is called Fannie Mae and Freddie Mac. And they only retain the servicing rights so that when you make your payment you’re paying Bank of America and that’s fine, however, they really don’t own the loan.  They’re merely servicing it for the secondary market, which is Freddie Mac and Fannie Mae, which sells bonds so that they can fund these mortgages which is high financing done in the billions of dollars and that’s what keeps the money available for our mortgage market.  But FHA mortgages are funded the same way as any other ones are.  They just have insurance and you have to pay a little bit extra for the mortgage insurance since you’re getting a high percentage loan to value.

 

So if you have any questions about your mortgage, FHA mortgage or otherwise, give me a call at 727-847-2288.

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What is FHA Mortgage Insurance?

 

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What is FHA mortgage insurance?  FHA mortgage insurance is a program that’s backed by the federal government wherein they insure the higher percentage portion of your mortgage to whatever lender happens to give you the loan.  So the FHA insurance ensures that the lender will not suffer loss for monies that they lend and I believe it’s above 80 percent of the loan to value.  So if you have $100,000 piece of property and that you got an FHA loan for $100,000, the FHA insurance would insure the first $20,000 of the loan.  So if you went into default and you owed $90,000, FHA insurance would then pay the lender $10,000 of the outstanding debt if they foreclosed and had to take back the property or up to $10,000 of the loss of the lender.

 

Now FHA mortgage insurance is not for the benefit of the borrower.  It’s for the benefit of the lender.  That’s who it insures.  The only benefit that the borrower has is they can borrow 97 to 100 percent of whatever the purchase price is or the appraised price of the property that they’re purchasing.

 

So if you have any questions about getting an FHA loan, well give me a call at 727-847-2288.

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How Do You Avoid Probate and Have Asset Protection?

 

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How do you avoid probate and also have asset protection?  Well, the easiest way to do that is if you’re a married couple.  Of course I don’t know – you’ve gotta be a couple I guess if you’re married.  But in any event, as a husband and wife, if you hold assets as a husband and wife or the term tenancy by the entireties and you should hold all your bank accounts and all your assets as husband and wife except automobiles.  And that way if something would happen to either of you, then the property would automatically pass to the survivor.  And so you’ve avoided probate by holding your assets in your names, as husband and wife.  The asset protection comes in so that if either one of your are sued, and they get a judgment against one spouse, it will not attach to assets that are held in the name of husband and wife or as tenancy by the entireties.

 

I suggested that you not have automobiles in your joint names as husband and wife since an automobile is considered a dangerous instrumentality so that if it’s involved in an automobile accident they can sue both the owner and the driver.  So whatever spouse is driving a particular automobile, they need to have it titled in their name as the primary vehicle so that if they are involved and they don’t have enough insurance coverage and they do get a judgment against one spouse that was not attached to the assets that are owned as tenancy by the entireties and also motor vehicles can be transferred without a probate proceeding whenever the first spouse passes away.

 

I gave you a quick overview as far as husband and wife property.  If you’d like some more information if you’re single as to what to do about asset protection and avoiding probate, well give me a call or if you have any questions as a husband and wife give me a call and we can do some estate planning for you at 727-847-2288.  Thank you.

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Update on Flood Insurance Legislation

 

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I’m going to do something a little different. This is going be an update on flood insurance legislation. I usually do not read; however, this is so comprehensive or has a long list of items, I have to refer to a report that I have, so you have to pardon me if I read this, but sort of give you an update, I think it’s timely as to where we are as far as flood insurance is concerned.  Here are some of the highlights. It caps the annual flood insurance increases to 18 percent for properties built after 1975 and if you went ahead and had to pay an outrageous premium before 1975, you can see about applying for a refund.

 

There is grandfathering, which is reinstating, which means if you built your house, or the house was built pursuant to the FEMA guidelines, well then it’s grandfathered in and you’ll keep getting the same flood insurance premium. The grandfathering now stays with the property, so that if you sell the property, it doesn’t necessarily mean that you have to have a new, that it triggers any change, so even if you sell the property, the flood insurance rating or whatever stays the same. Residential policy holders will incur a $50.00 surcharge annually and for businesses and second homes, the surcharge is $250.00. Next, FEMA will strive to reach a goal where the premium is no greater than one percent of the coverage of the property. So, if you had a $200,000.00 house, then your premium, they’re trying to keep it at $2,000.00. They have gone back under the Act now that the substantial improvement issue, you’re up to 50 percent guideline under the Act, they were rolling that back to 35 percent, but now it’s 50 percent. The established ombudsman under flood insurance or someone you can contact to try and answer your questions about that, unfortunately, I don’t have the number or how to get in touch with them and I don’t even know if that’s been established yet or not. They also are going to make arrangements so flood insurance can be paid in monthly payments and if you appeal your flood designation to FEMA and you win, well, FEMA will reimburse your premium. They are trying to set up a regulatory framework that’ll encourage other insurers to come in and write flood insurance and this will be basically for residential coverages, this won’t be for, apply to second homes or commercial properties.

 

They also changed what they mean by flood and then they have different types of coverages that you can obtain.  You can get a standard coverage, a preferred coverage, a customized coverage and a supplemental coverage. I’m not gonna go through what all each one of these coverages are, it’s enough to know that you can see about getting your coverages customized and you can see how much the premium difference there is. It allows surplus lines agent to send the contract out for endorsement for surplus lined companies without making a diligent effort to find coverage with the primary insurer. It prohibits state-created increases for hurricanes under the hurricane fund.  I’m not sure just what they mean by that.

 

 

Allows Florida Insurance Commissioner to provide for any federally required certifications and the bill is effective upon becoming law. Hopefully that gives you enough to know that there have been some changes. I suggest that if you have questions, hopefully your insurance agent is aware of all these changes, so if you speak to them, they will be able to bring you up to date as to what effect of your coverage’s.  If you want some of this material or whatever, if you contact me, I’ll be glad to send you a copy of this synopsis on the paper I’m reading from, which it’s a newsletter that I received from the Real Property Probate and Trust Law section of the Florida Bar.

 

My phone number is 727-847-2288.  Thank you.

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Ask Thomas Mitchell: What Steps Do I Take to File for Guardianship of My Elderly Parents?

 

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Good morning, my name is Tom Mitchell; I’m a partner with the law firm of Waller & Mitchell in downtown New Port Richey, Florida. I want to speak to you today a little bit about what you have to do if an elderly member of your family, a parent perhaps, starts to lose the ability mentally or physically to take of themselves. If your family’s fortunate and the parent has done the proper planning, they may have a Power of Attorney in place, which means that the trusted family member whose been given that power can act on their behalf, but if there is no Power of Attorney, it may be necessary to file a guardianship action on behalf of the person.

 

Now a guardianship action is a court proceeding and what happens is that you need an attorney and the attorney prepares certain documents that are known as pleadings and the pleadings state that we believe this senior individual is incapacitated, that’s the technical word, doesn’t mean they’re mentally unable, doesn’t mean they’re physically unable, but it’s some combination typically of both. They have had a decline in mentation and they have the usual problems of the aging process. So we file these pleadings, we describe what we think the problem is, we list who the doctor is, we list who the family members are and at that point, those papers get filed with the court, the court then appoints a medical committee, a three person committee to examine the individual and make a recommendation as to whether or not a guardianship is needed. The court also appoints an individual, an attorney, to represent the alleged incapacitated person, just to make sure that they’re not some nice little old person that we are trying to steal all their money, and by the way, if you’re thinking of that, don’t do it in a guardianship, because the court supervises guardians very closely.

 

 

If you need to file guardianship action on behalf of one your parents who may be declining in their later years, you can contact me at Waller & Mitchell and we’ll be glad to take care of it for you. This is Tom Mitchell with the law firm of Waller & Mitchell in New Port Richey, Florida.

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