FHA Proposed Changes For 2013

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

In the previous blog FHA Has A $16 Billion Loss In The Monthly Mortgage Insurance Value, I outlined why I believe both the media and Washington Politicians will overreact to the latest news from FHA, and provide some reasons for this huge loss in the Monthly Insurance Value.  In this blog I will list some of the FHA Proposed Changes For 2013 that I feel are important to point our.

Many of the Changes that are being proposed by FHA are in anticipation of the overreaction that they are expecting from the media and Washington.  In their anticipation of the overreaction from the media and Washington, I believe that FHA is overreacting as well. 

Some of the FHA proposed changes are long over due, but I don't agree with a number of the others, especially the first few on the list below.  I believe that these changes will discourage qualified Borrowers from purchasing a home once they are adopted.  The restrictions, and further oversight of Lenders may sound good, but they will most likely only further slow down the mortgage process by creating more paperwork that no one will enforce.

As I pointed out in the previous blog FHA Has A $16.3 Billion Loss In The Monthly Mortgage Insurance Value most of the reasons for the $16.3 Billion loss was because of mortgages written between 2005 to 2009, and there is very little that we can do about those mistakes now.  The proposed FHA changes below are expected to be implemented in January of 2013, and continue to be implemented though the 1st Quarter.


FHA Proposed Changes For 2013

  • Raise Monthly Insurance Premium (MIP) by 10 bps, it is presently 1.20 & 1.25
  • Eliminating MIP cancellation policy on new mortgages
  • Implement Housing Counseling
  • Increase the number of modification programs now offered by FHA, and bring them more in line with those offered by HAMP
  • Improve the resolution process for negative-recovery mortgages
  • Improve and increase the number of note sales
  • Request Congress for additional Legislative Authorities to protect the Fund
  • Enabling FHA to treat all FHA approved lenders equally with respect to non-compliant loans
  • Strengthens FHA’s indemnification authority by eliminating the knew or should have known requirement for fraud
  • Request Congress for the authority to terminate Lenders with default rates significantly higher than other Lenders
  • Request Congress for more authority to manage the Reverse Mortgage program, to better protected Borrowers in maintaining their Reverse Mortgage.

In a time that we need to be finding ways to stimulate the Real Estate Industry, a number of the proposed changes above will only accomplish slowing it down further.  New Borrowers already have to many artificial cost included in their mortgages, and several of the proposed changes above will only further increase those costs.  What we need for FHA and Washington is to seek is real solutions from those in the Lending Industry that have first hand experience with what is wrong, and know what is needed to fix it.   What we need is the use of common sense, and a lot less of overreacting.


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 Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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Rainmaker
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Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Thank you for putting the list together, I had not seen it. Wow, some of these proposed changes are not good for possible future FHA clients. What that means, is FHA might not be the right solution for many that seek to own a home.

Nov 25, 2012 06:19 PM #1
Rainmaker
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Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

This is some good Info for all in the business,  keep up the good work and good luck with your business,  E

Nov 25, 2012 06:25 PM #2
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

"Implement Housing Counseling"

This is one I'd dump. Seems to me that it's simply more bureaucratic involvement where the loan officer is fully capable of performing this task. 

Most of the "counseling" is done by a computer program anyway and the borrower learns NOTHING, ABSOLUTELY NOTHING.


Nov 25, 2012 07:01 PM #3
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Andrea Swiedler
Coldwell Banker Residential Brokerage - New Milford, CT
Realtor, Southern Litchfield County CT

George, when we react based on the media, it is never a good thing. I am disappointed at best.

Nov 25, 2012 08:24 PM #4
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joe I agree, they are making it much tougher on Borrowers with every change they make.

Eda and Tracy thank you

Lenn, you are right.  There is nothing that they are going to get at one of the counseling classes that they can not get from me.  In fact they will get more from me because it will be specific to their situation.

Andrea, I share the disappointment, and I will through in lots of frustration to go with it.

Nov 25, 2012 09:04 PM #5
Rainmaker
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Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

George, this is cutting into the first time home buyers funds, which most don't have to start with!   You always keep us informed, and love it!

Nov 25, 2012 10:40 PM #6
Rainmaker
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Linda Piper
Planatek Financial, Inc. - Westlake Village, CA

More common sense and less over reacting...completely agree!  Further, anyone who participates in passing legislation regulating a specific type of entity such as the FHA should be required to spend a minimum of 6 months actually working in and understanding the business environment they are writing legislation for...perhaps then we'd see some much needed common sense!  Great article George.

Nov 25, 2012 11:24 PM #7
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joan you are correct, and that is not we need at this time.

Nov 26, 2012 08:25 AM #8
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