Last week the House Financial Services Committee put forth a "discussion draft" on FHA reform. The draft has a number of good provisions (providing increased lender enforcement, other risk avoidance tools, etc). However, there are several provisions that I STRONGLY oppose.
The first would raise the FHA downpayment for all borrowers to 5%, and prohibit the financing of all closing costs and the Upfront MIP.
The second would change the whole calculation of the loan limits by making it 125% of median home price by county. It would eliminate the MSA rule - which raises all counties within an MSA (metropolitan statistical area) to the highest limit in that area, and it would eliminate the FHA floor of $271,050 (which means low cost counties would go to 125% of median - under $100k in many areas). It would make the high cost limit $625,500.
It is very important to note that this is a "discussion draft" - not legislation yet.
The bill also includes the issue of moving Rural Housing to HUD.
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