I was listening to a brief interview with the new FHA Commisioner David Stevens and I was stuck by the fact that we have had so many major changes at the FHA. Here's just a couple of examples of the major issues;

Capital Reserves

Stevens stated that we have over 30 billion in capital reserves. That there is both a primary and secondary reserve account AND that the loan quality has improved. Seems like all is well according to the Commish.

Credit Scores

Once again I hear that there is no credit threshold for FHA loans. I feel cheap and just a little dirty when a high ranking FHA official states there is no credit score requirement for FHA loans, which is technically true, without mentioning that these loans are being funded by institutions who definitely are credit score driven, usually with a 620 minimum.

I am aware that some companies are claiming to do loans with less than a 620 score, BUT how many loans do they really approve? One out of ten, one out of twenty, really I'm not sure. In Southwest Florida a buyer, in almost every case, needs a written preapproval letter, and I'm not putting my name on any preapprovals with less than a 620 score.

I find it interesting that the Commish stated that the average credit score for FHA loans is currently 690. They may not have a requirement, but they sure are monitoring the situation. Veeeeeeery interesting.

Market Share

An FHA market share of almost 30%, which is what Mr. Stevens claimed, is a little scary to me. Being in Southwest Florida, and having lost the ability to do any conventional loan with PMI, as it no longer exists here, I am aware that any loan with less than a 20% downpayment goes to FHA, or one of the other govern(mental) outlets.

Just for auguments sake, why wouldn't an MI company want to do a loan with a 10% downpayment (minimum), 720 credit score, and ratios of 33/38. I know that this is a restricted market, but it would be the cream of their previous product, and in all likelihood have a lower default ratio. It would also take some of the pressure off of the FHA. Once again 30% scares me, and it's rising. 

Mr Stevens took office July 15th and was handed this rapidly growing organization. To a degree the FHA currently reminds me of "Jabba the Hut," it scares me a bit. Throw in the fact that it is partially regulated by the Congress and look out.

All I can say is;

Ladies and Gentleman

meet

The NEW FHA!