Date: September 22, 2000
To: VHDA Originating Lenders
From: Michele G. Watson
Re: FHA Downpayment Simplification Program
As I am sure you are aware, the FHA Downpayment Simplification Program expires on September 30th, 2000. VHDA will be unable to close loans under the simplified process past this deadline. If it is allowed to expire, the borrowers could possibly have to contribute an additional $2,000 toward their downpayment and closing costs.
In the event the September 30th deadline passes with no extension, as a temporary solution, VHDA will allow eligible borrowers to change their loan reservation to an FHA PLUS loan to accommodate the extra funds necessary for downpayment and closing costs. For borrowers who either have a reservation or have received a loan commitment for an FHA PLUS loan, VHDA will allow a recalculation in the FHA first mortgage to comply with downpayment requirements. We will also permit the PLUS second mortgage to be increased to absorb the additional costs.
The Mortgage Bankers Association of America is asking its membership to lobby on behalf of a permanent extension. By dialing their toll free number 1(800) 944-6723 you will be able to place a call to your legislator. Please contact the MBA website for additional information.
Additional instructions regarding VHDA procedures will follow shortly, depending upon the outcome of the legislation. Should you have any questions, please do not hesitate to contact either me or members of the Single-Family staff.
Michele G. Watson
Assistant Director of Single-Family Loan Programs