Yes HUD (and our government) is at it again and yes the mystery continues as to why they do what they do. Great thinking on the yield spread premiums, the revised good faith estimate, HVCC appraisal mess, the elimination of a cost neutral down payment assistance program....do I need to go on?
HUD has decided that the seller can no longer contribute 6% toward closing costs and or prepaid expenses. Instead they say the magic ....the place where the healing begins....is 3%. YES, 3% is the magical number and will solve unemployment, the real estate collapse, too big to fail and that nagging itch....fine whatever.
For example if you buy a home for $200,000 the seller can contribute $6000. This means the borrower will pay some cash out of pocket in addition to their 3.5% down for their property tax, insurance and interim interest impounds. No it is not the end of the world my point is to ask the question why? Why now?
Yes, your government hires a man that draws pictures....an architect. This is the guy that will manage us out of a housing crisis at one of the most important domestic departments (HUD) in government?
On another note HUD is increasing the Up front insurance premium from 1.75% back to 2.25% (the good ol' days) which isn't a bad thing in fact they should have done that a long time ago.
Remarkably, the idiots at HUD did not increase the down payment to 5%. What happen there? I call it a miracle but the day is not over.
I hope the real estate and lending community along with the public at large contact their representatives and give them an ear full. I have and I will continue to do so.
Sorry about the rant.
I wish us all well.