FHA changes may be on the way! Please see this great info below for more details. These FHA changes may affect many of you directly. For Realtors reading this info, the FHA changes may affect the lenders that you currently do business with, especially if you are working with a mortgage broker.
The proposed FHA changes for condo guidelines would also severely limit condo properties that would qualify for FHA financing, which could further lead to problems in the housing market recovery. We will be watching these proposed FHA changes closely and hope to have more info on any FHA changes soon.
Two FHA changes happening right now that aren't related... or are they?
There is a proposal (scheduled to go into effect Jan 1, 2010) that indicates one of the FHA changes is that brokers will no longer be approved by FHA to participate in FHA mortgages without going through an approved sponsoring lender. The responsibility and loan liability of mortgage brokers would fall squarely on the shoulders of the FHA sponsoring mortgage company. Net worth for FHA mortgage lenders is going from $250,000 to $2.5 million!
What does that mean? Long story made short: FHA is expecting sponsoring mortgage companies to create a sort of "Neighborhood Watch Program" for brokers.
How will these proposed FHA changes affect mortgage brokers? Dangerous position. Extremely volatile right now.
Secondly, we've all heard about FHA proposing HUGE changes with condo approvals. The desired outcome is to put the burden of proof on the shoulders of the lender. To be considered with the new FHA changes, the property would be subject to the following (as an example)
1. Due to noise concerns, FHA insurance will be unavailable for properties that are within 1000 feet from a highway, freeway or heavily traveled road, 3000 feet from a railroad, one mile from an airport, five miles from a military airport
2. FHA financing will not be available to properties located within 2,000 feet of any facility handling or storing explosive or fire prone materials like gas station, fire cracker sales or manufacturing operation, facility that stores or uses flammable or explosive chemicals.
3. FHA loans are not available if a property is located within 300 feet of dump, landfill, etc.
See the article for more information: FHA Changes (note: these changes have again been delayed, this time until January 1st).
How will these FHA changes affect condominiums? Dangerous position. Extremely volatile right now!
The FHA changesthat are being proposed would suggest that more responsibility is being placed on the shoulders of the remaining lenders still participating in FHA financing thus lessening the burden of FHA.
FHA was created in 1934 to provide adequate financing alternative and stabilize the mortgage/ housing marekt. Even with the proposed FHA changes today, it remains the best financing option available whether buying your first home or a move up home.