FHA continues to toughen its lending criteria.
In January, new appraiser independence guidelines will take effect for FHA lending. FHA is adopting the language of HVCC. The goal is to separate loan origination from the appraisal. Banks will set up separate appraisal ordering processes for their internal originators and for their broker originators.
Coming soon FHA will change the approval process for lenders and correspondent/brokers. This change will give lenders more say over which mortgage brokers they accept. It will also increase the lender net worth requirement over 3 years. The new net worth requirement will be $2 million, with 20% liquid.
Tougher enforcement has already been evident - see TBW and Lend America and many others. Now there will be tougher lender approval guidelines.
We will see how this change will impact competition, but it may be that near future FHA lending guidelines will so severely restrict the number of qualified buyers that lender competition will be less of a concern.
The biggest, most impacting, change though, for consumers as well as for lenders, will be in the area of borrower qualifications. Already we have seen tightening for FHA Streamline refinances.
Coming soon:
- higher mandated credit scores
- larger down payment - to 5%?
- lower allowed seller paid closing costs - to 3%?
- increased mortgage insurance premiums
Details are expected to be announced by the end of January, but in a recent NPR interview Secretary Donovan said,"We just lowered the percentage of what we call seller concessions." I have not seen the change, but Secretary Donovan said it has been done.
He wants "more skin." He want borrowers to bring more cash to closing. Apparently a lot more.
I take that to mean that the decision is finalized - more skin right now means lower seller concessions.
And soon it will mean higher down payments and higher monthly payments from higher mortgage insurance.
Here is the interview.
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Richard Smith
NMLS 184479
Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898
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American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee
Email: rsmith@aamonline.com
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FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation
Home financing in Tennessee and Georgia.
www.RichardSmithHomeLoans.com
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Thank you for visiting. This is the professional blog for
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Richard Smith
NMLS# 184479 TN# 40161 GA# 28928
Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC).
Lending in Chattanooga, Tennessee and Georgia for over 20 years.
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Stearns Lending, Inc
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Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com
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Visit my website: www.RichardSmithHomeLoans.com To inquiry about a home loan Begin Here
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Read my most recent articles in Scotsman Guide.
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This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc.
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Richard: Thanks for your post. Lending guidelines will get tougher indeed...Now FHA...