As I mentioned in my earlier post on the House housing/mortgage bailout, I would be watching for the "under the radar" details of the plan. Well the first flight just landed in my Inbox:

Subject Line: FHA Risk Based Pricing  (courtesy of Dale Noble, our office's Wells Fargo Loan Officer)

Of course, the subject line elicted an "ah #&%@!" comment from me, but I was pleasantly surprised when I read Dale's comments:

Well, the subject line says it all. FHA is going to risk based pricing. That's the bad news. The good news is that it will make barely a dent in the payment. HUD has announced that beginning July 14, the up front mortgage insurance premium on FHA loans will be based on credit score. As of today, we don't know what the credit score ranges will be. The current up front premium of 1.5% is charged to buyers regardless of credit risk. The new premiums will range from 1.25% - 2.25%, a little good news for those who have favorable credit scores. So, the effect the worse case scenario ( 2.25% ) would present to a payment for example, is $8.99 per month, on a $200,000 loan.

What differentiates this plan from the new conventional loan guidelines of risk pricing below a 720 credit score is that the premium/penalty will be on the MI Premium rather than the rate. This should mean business as usual with FHA loans.

Hopefully, this will be the extent of the tightening of FHA loans (and of lending guidelines in general). Unfortunately, I think that is just wishful thinking.

Note: I have not seen this reported in my news feeds, but Wells Fargo always hears about this well in advance of the rest of us non-mortgage professionals. Let me know if you've seen official details of this change.

Read more about Will & Grundy Counties, IL at my blog, the Will/Grundy Real Estate Report