I think many of us saw this coming when FHA fell below their minimum reserve requirement last year. The writing on the wall started with the fico increase from 620 to 640 for streamline refinances. We will await the final say from our investors and how they will impose their guidelines on to the consumer. The premiums are not too worrisome but the fico score increase will be. My guess is that we will see 10% down for fico scores 620-640 or even 660. Anyone with a 640 or 660+ fico will have the 3.5% option. As a trend, we've also been seeing a higher standard for Debt to Income ratios. Meaning that lenders are requiring lower ratios which obviously makes it even harder to qualify. With the tightened guidelines and new imposed regulations for compliance this year, we will see a further consolidation of the industry this year as many brokers and weak lenders will go out of business. Everyone start getting your red and blue ready for Bank of America to monopolize this industry it's beyond obvious as to their intentions.
In a move to shore up the FHA's beleaguered balance sheet, Commissioner David Stevens on Wednesday announced big changes at the government mortgage insurer that now backs about half of all home loans to the nation's minorities.
The FHA will raise the up-front Mortgage Insurance Premium, paid by borrowers, from 1.75 percent to 2.25 percent as well as request legislative authority to increase the maximum annual MIP that the FHA can charge. This is the second time in two years that it has raised the premium.
“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens in a written release.
In addition, in order for new borrowers to qualify for the 3.5 percent down payment program, they will now be required to have a minimum FICO score of 580. Borrowers with a lower score will be required to put down at least 10 percent.
The State of Housing Current DateTime: 02:58:01 20 Jan 2010 LinksList Documentid: 34937606 Government Mortgage Plan Aids 7% of Borrowers Comparing Home Loans Now Easier 10 Tips to Buy or Sell Real Estate in 2010
In previous interviews with CNBC, Commissioner Stevens said he wanted borrowers to have more "skin in the game," and this is clearly a means to that end. Some mortgage bankers had been concerned about a proposed change that would prohibit borrowers from financing the up-front premium, but that is not included in this announcement.
The FHA will also reduce allowable seller concessions, or how much the seller can help the buyer, from 6 percent to 3 percent. The change will give borrowers a greater financial stake in their home purchases, as well as brings the FHA into conformity with industry standards on seller concessions.
The FHA, which does not lend but only insures home mortgages, has been under increased scrutiny of late, as rising defaults put the agency below its required reserves. The authority went from insuring barely 3 percent of all home loans at the height of the latest housing boom to now backing an estimated 35 to 40 percent of new loans. It has been a significant player in housing's so far weak recovery.
“The changes announced today by the FHA represent an attempt to navigate a prudent course without negatively impacting access to credit or contributing to a further slowing of the housing market in communities of color," said David Berenbaum, Chief Program Officer at the National Community Reinvestment Coalition in a written release.
"While borrowers will bear more of the costs of the government insurance program through higher premium charges, the additional revenue will help ensure that FHA stays solvent."
www.fhamadesimple.com
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