FHA is doing some more revamping that will be in effect in April after the expiration of the tax credit. Here are some of the upcoming changes:
1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending. Borrowers will have higher monthly payments to satisfy this requirement.
2. New borrowers will now be required to have a minimum FICO credit score of 580 to qualify for FHA's 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. However, many lenders are requiring at least a 620 credit score now to qualify for a 3.5% down payment loan.
3. Reduce allowable seller concessions from 6 percent to 3 percent. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value.
4. Increase enforcement on FHA lenders. Publicly report lender performance rankings to complement currently available Neighborhood Watch data; will be available on the HUD Web site on Monday. You can go to www.hud.gov and see which lenders are doing what they are suppose to do under FHA lending guidelines.
I thought it was kind of interesting that the government thought these changes were going to have a real big impact on the current lending of FHA backed loans. I dont' see it affecting our sided of the business very much other than some of our buyers might be affected by some of these changes.
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