On Friday, Jan. 15 NAR sources in Washington D.C. indicated that FHA is about to announce the following changes to its purchase finance programs.
Borrower Issues:
- Borrowers will be unable to finance upfront premiums;
- Seller concessions will be reduced from 6% to, possibly, 3%;
- Borrowers must have a minimum FICO score and their maximum loan-to-value ratio may be impacted by their FICO score; and
- Mortgage Insurance Premiums may be raised from their current 1.75% level.
Lender Issues: While the final lender eligibility rule has not been published, NAR is reporting the following proposed changes for FHA lenders:
- Increasing net worth requirements of lenders to $2.5 million over the next 3 years;
- 20% of lender net worth must be liquid assets; and
- Increased default monitoring by lender underwriters.
FHA will also be changing its risk management procedures; creating a lender scorecard and highlighting poor performing lenders on their website and in press releases. For more information please visit the NAR website by clicking here.
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