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FHA making it harder to buy a home

By Paul Gruber

Real Estate Agent with The Edge Group LLC 1298065

February 27, 2009 07:51 AM

Why our government says they are trying to loosen up credit but then FHA goes to a FICO score driven system is beyond me? As of March 2^nd most if not every lender using FHA insured loans are going to require a buyer to have at lease a 620 FICO or better. I understand that FHA is the insurer but if there wasn't pressure from FHA to the lenders why are they knocking out an entire segment of buyers from the market?

Official statement from one of the lenders I refer my buyers to:

FHA is not FICO driven however effective Monday, March 2nd, 2009, all FHA/VA loans, credit qualifying and non-credit qualifying are required to have at least one occupying borrower with a usable score of 620 or better. This applies to all underwriting types (i.e. automated or manual). You may have an additional non-scored, occupying borrower, but the usable FICO score for all transactions must meet or exceed the minimum requirement of 620.

Maybe the people making these decisions should speak to people in the industry at the street level. I imaging a bunch of executives that have never shown a home or had a buyer fill out a loan ap are making these decisions.

Paul Gruber CRS, e-Pro, REALTOR

Broker/ SR Partner

Metro Brokers - The Edge Group, Inc.

paul@theedgegroup.net

www.theedgegroup.net

7400 W Jefferson Ave

Lakewood, CO 80235

303-886-5991

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Andrew Lietzow

IaREIA | Iowa Landlord Association - Des Moines, IA

MBA-Exec Dir Iowa Real Estate Investors Association -

Yes, Paul. Show me the money, lenders!

Particularly for investors who are going to need to rehab these REO's because many owner-occupants are not going to be up to the task.

Confucious say, "May you live in exciting times". I think these qualify!

Feb 27, 2009 08:00 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

I am of the opinion that there are a lot of bureaucrats who are on a power trip over home buyers and especially moderate and lower income buyers.

Why?

Because they can.

The burden to cure the real estate industry cannot be born by the moderate and lower income buyer any more than they were responsible for the mortgage mess.

It's criminal, in my opinion and represents a new type of classism or elitism.

It stinks.

Feb 27, 2009 08:01 AM

Joanne Tarantino

Berkshire Hathaway HomeServices Knight & Gardner Realty - Key West, FL

CRS, Realtor

Probably never even showed a house from a car! Just another obstacle for us to traverse, WE WILL prevail!

Feb 27, 2009 08:02 AM

Eric Murrietta

Homeowners Financial Group USA, LLC - Scottsdale, AZ

It sure isn't making it an easier. The less liquidity there is, the tighter they have to make guidelines. Clearly someone with 590 (if the credit scoring system is dependable) is more of a risk than someone with 620. They can't afford to have the higher risk loans default or else it limits the amount of insurance they have available to fund FHA loans.

I agree, it is frustrating, terribly frustrating. On the flip side though, should we allow people to make such a large purchase when they have shown a history of inability to pay their debts. As tough as it is to swallow, I am not sure rewarding irresponsiblity (in most cases) is the way to go.

Feb 27, 2009 08:30 AM

Konnie Mac McCarthy

MacNificent Properties, LLC - Cobb Island, MD

Broker/Owner - VA & MD "Time To Get A Move On!"

It is rediculous....in the lower price ranges, these owner occupants have to contend with investors...now this...I personally think that they should put out a law that states owner occupants should have first priority over investors in some price ranges..

Feb 27, 2009 09:10 AM

Tom Boos

Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI

Providing the very best of service to Sellers and

A 620 score for FHA is surely going to knock some buyers out of the market. I hate to say that it is probably a good move in the long-run to force borrowers to become a bit more responsible in the manner that they manage their credit. As a Realtor, of course, it will certainly affect my sales production in the coming months. Nuts.

Mar 05, 2009 05:15 AM

FHA making it harder to buy a home

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