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Changes are coming to FHA loans. Do you think it would be wise for Home buyers to use the FHA loans?

By Endre Barath, Jr.

Real Estate Agent with Berkshire Hathaway HomeServices California Properties 01238708

June 11, 2010 11:42 AM

Changes are coming to FHA loans (Federal Housing Administration Loans).Let me ask you: Do you think it would be wise for Home buyers to use the FHA loans?

Congress is expected to approve House Resolution 5072 or better known as the FHA Reform Act of 2010. Many lenders of the mortgage finance industry are concerned that HR 5072 part of the provision of this law is geared towards, cracking down on lenders who are approved by FHA. These lenders are concerned that the law would do more harm than good. What are your thoughts?

I am all for regulations if they benefit the Real Estate in a responsible way. I am not for regulation for the sake of regulation. I am concerned that the buyers who use FHA have generally lower FICO scores (credit scores), less financial means to save up to 20% for a conventional loan down payment. Hence they will have less means to save and survive catastrophic situations such as job loss or medical issues. So I am afraid that the future FHA buyers will be set up for failure and we are creating the next Real Estate crisis. Join the discussion and tell me if I am off base.

If you are a consumer who is considering buying or selling a home, investment real estate, vacation homes, or beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Culver City, Marina Del Rey, Venice or Malibu. Feel Free to give me a call at 310.486.1002 (USA) or email me at homes@endrebarath.com or visit one of my websites at http://www.endrebarath.com Your Pet Friendly Realtor. I contribute a portion of My commission to Local Animal Rescue Organizations.

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Carla Muss-Jacobs, RETIRED

RETIRED / State License is Inactive - Portland, OR

When you state they intend to crack down on lenders who work with FHA products, how so??

Jun 11, 2010 11:45 AM

Karen Crowson

Coldwell Banker Residential Brokerage - Rancho Bernardo, CA

Your Agent for Change

I think there are some younger buyers who just don't have a long history of credit, or a large enough downpayment saved to go beyond FHA. They see attractive pricing and financing right now, and see this as an opportune time to get into the market. They have good incomes, and are usually looking at increasing salaries in their future as their careers take off. I wouldn't want to see those type of good borrowers left out of the buyer pool.

Jun 11, 2010 12:02 PM

Ken's Home Team LLC. | 360.609.0226 | Portland, OR & Vancouver, WA Real Estate Team

Ken's Home Team LLC. - Vancouver, WA

- SOLD IS OUR FAVORITE 4 LETTER WORD -

OK Got to ask do you have a link for us to see what the exact changes are?

Jun 11, 2010 12:14 PM

Endre Barath, Jr.

Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA

Realtor - Los Angeles Home Sales 310.486.1002

Carla Section 6 "...establishes within the Federal Housing Administration a Deputy Assistant Secretary for Risk Management and Regulatory Affairs responsible for all matters relating to managing and mitigating the risk to HUD mortgage insurance funds and for enuring the performance of HUD-insured mortgages...." this is directly from Maxine Waters' comments about one of the changes. The way I read this. He who gets this job will have a lot of discrssionairy power, hence my term of "crack down" on Lenders when it suits them.

Jun 11, 2010 12:18 PM

Karen, valid points, thank you for enhancing the discussion.

Jun 11, 2010 12:19 PM

Ken here you go it is about 24 pages http://www.rules.house.gov/111/LegText/111_5072_txt.pdf

Jun 11, 2010 12:22 PM

Charita Cadenhead

eXp Realty - Birmingham, AL

Serving Jefferson and Shelby Counties (Alabama)

I read the Realtor.com version: This bill, H.R. 5072, FHA Reform Act of 2010, would strengthen the FHA loan insurance program while keeping it available and affordable to responsible home buyers. Allowing FHA to raise the monthly insurance premium would let FHA lower the up-front premium that places a burden on cash-strapped borrowers at closing.

After reading this, I was thinking: "Okay. I'm just not buying this." Look at they keywords

"already cash strapped" (can the few pentance of a savings upfront "unstrap" the cash.

"allowing FHA to rais monthly insurance premium" (to what degree)

I remember around 8 years ago when I refinance my previous home, no one wanted to work FHA loans. We may be readed back in that direction simply because of the complicated web it's weaving.

Jun 11, 2010 01:12 PM

Charita, as soon as you said Realtor.com version I cringed:)) To be fair I am being polite when I say I am not a big fan of Realtr.com .....subject for another post.

Now the FHA Policy Changes will effect the cost of the loan as well as the approval process. Insurance premiums will increas and seller concessions will change as well. That is my take on it.

Jun 11, 2010 01:18 PM

Changes are coming to FHA loans. Do you think it would be wise for Home buyers to use the FHA loans?

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