F.H.A. to Raise Standards for Mortgage Insurance

F.H.A. to Raise Standards for Mortgage Insurance

By DAVID STREITFELD Published: January 19, 2010 New York Times

"The Federal Housing Administration, which is supporting the housing market by insuring thousands of new mortgages every day, is expected to announce on Wednesday that it is tightening standards.

Borrowers who get an F.H.A.-insured loan will soon have to pay a higher initial insurance premium. The new premium will be 2.25 percent of the value of the loan, up from 1.75 percent.

Starting this summer, sellers will not be able to offer as much help to buyers to pay their closing costs. The maximum amount of assistance will drop to 3 percent of the value of the property, from the current 6 percent."

http://www.nytimes.com/2010/01/20/business/20home.html?hp

"Other changes will try to hold lenders who participate in the F.H.A. program more accountable by publicly reporting their performance rankings.

"The new measures are aimed at shoring up the agency's finances while also screening out unprepared borrowers."

Borrowers who want to put the minimum down will now be required to have credit scores of at least 580, a relatively poor figure. Previously, there was no minimum score. But this rule might have little effect. The agency says that in practice, new borrowers already have much higher scores."

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