New FHA Guidelines Shake Things Up

New FHA Guidelines Shake Things Up

New Federal Housing Administration (FHA) guidelines are definitely making waves among real estate professionals and homeowners. Right off the bat, the FHA’s Commissioner David Stevens will be making changes that will primarily effect appraisals and senior homeowners.

Facing a staggering $800 million shortage on its insured reverse mortgages, one goal for the FHA will be to reduce the amount that senior citizens can receive through the attractive reverse mortgage programs out there. The goal is a 10% reduction in the total amount of reverse mortgages that go through the FHA. The shortage appears to be a result of property values dropping and the agency will most likely not receive any additional funding to make up for the shortage.

In addition to this important announcement, the FHA will be changing criteria for home appraisals to be more closely aligned with the new guidelines used by Freddie Mac and Fannie Mae. The biggest change is the fact that the FHA will no longer be accepting any appraisals that are done by mortgage brokers or lenders.

The FHA had previously advocated 3rd party appraisers be used and that they be paid their appraisal fee for their service in full. The FHA ensured appraisers to be experienced in conducting appraisals in the geographic location of the home. This will no longer be the case and will grossly effect the accuracy of appraisals completed. The appraisers will be from different markets which can result in erroneous appraisals.