FHA New Lending Standards For Mortgages and Home Refinances
Heads up folks, there is a new wrinkle in the housing market and it is going to make borrowing (and closing home sales) harder. The FHA is tightening their lending requirements in the face of losses in the past year.
We have had 2 big drivers of the housing market in the past year. The FHA taking up the lending slack for marginal buyers and the $8,000 rebate for new home buyers. We all know that the home buyers rebate is going away at the end of November, and now we are looking at the FHA’s tightening taking another level of buyers out of the market.
So as they say on Hill Street Blues, be careful out there folks.
“Under no circumstance will any taxpayer bailout be needed,” said Stevens. The FHA Commissioner insisted that borrower fees would not be increased, nor would the number of loans it insured be reduced. So without raising fees, or cutting back on the number of home loans the FHA would insure, Stevens gave no logical answer as to how the Federal Housing Administration would get its financial cushion back to mandatory minimum levels without changing its loan insurance terms.
One area the FHA is examining is loan appraisals for homes under construction. Now they’re good for 12 months, but its going to be changed to 4. FHA lender requirements are also being changed. Currently, lenders only need $250,000 in net capital. Under the proposed rules change, that figure will rise to $1 million. Refinancing FHA loan will also require new income verification and quality control checks and a maximum loan amount will be 125% of the value of the home, which some say is too high.
The FHA czar is also going to bring on board a chief risk officer for the first time in the Federal Housing Administration’s history, sort of like an overseer of loan apps at a mortgage underwriter. via Axcess News.
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Comment by Gainesville Real Estate on 20 September 2009:
I hope not. Also, didn’t Harry Reid introduce a bill this week into the senate to expand and extend the tax credit?
Comment by Sell House Online on 23 September 2009:
Yes.. you are true. I have also heard about the new rules introduced by FHA for mortgages. Well. The FHA has reduced refinance of agency’s borrowers homes to new standard to 85 percent of the property’s value which is earlier 95 percent. I always think that FHA do the right things. It’s their duty to provide sufficient home financing system to people. It is good if you provide more information.
Comment by Stephen Davis on 1 October 2009:
The problem is FHA will change the rules to make it look like they are doing something to protect the public. However, as soon as things start looking up again, they will go right back to their old habits. Seen it before.