Get out your permanent markers, HUD seeks public comment on three main issues for FHA loans

Reblogger Kelly Turbeville
Real Estate Agent with Century 21 Award-Superstars

Good information here from Jeff Belonger of Infinity Home Mortgage Company, Inc.  

Thanks Jeff for the post!

Original content by Jeff Belonger

 

You can make a difference - you have 30 days to comment against FHA's proposals

you can make a difference with FHA loans

 

With a difficult economy and possibly some new FHA mortgage changes coming in the new future, this could be time to make your voice heard. HUD made this announce back in January 20th, 2010 - FHA announces policy changes to address risk and strengthen finances - I parlayed this announcement into layman's terms. - FHA loans and some possible mortgage changes.

 

So now, FHA just announced that there will be a 30 day period for comments on these issues described above.  These proposals are designed to limit the risk in regards to the Mutual Mortgage Insurance Fund and at the same time, trying to promote sustainable homeownership for FHA borrowers.

 

 

 

The 3 possible changes to FHA Loans :

FHA loans list of proposals

 

1. Changing the combination of credit scores and downpayments. You will need a credit score of 580 or above to still be eligible for the regular 3.5% downpayment. If below 580, you will be required to put 10% down. And FHA loans will not allow any loans with credit scores below 500.

My opinion :  I am not concerned with this proposal. Most lenders require credit scores of 620 or higher on FHA loans. I wrote about it here. - FHA home loans have no minimum credit scores - So FHA, you can have this one.

 

2. The reduction of seller concessions from 6% to 3%. Many of us know that this could have a huge impact on many different housing markets.

My opinion : I truly think this could affect those buying homes from $150,000 and below. Especially those homes prices at $100,000 and below. That would mean on a $100,000 home, the buyer could only get $3,000 of help towards closing costs. - FHA, since I gave you #1, I want #2, and keep it at 6%. Update... keep this in mind - If a borrower has to come up with more money now, what does that do to their cash reserves in many cases.  In troubled times, does this mean that they will default quicker now?

 

3. To tighten FHA underwriting standards for manually underwritten loans. FHA's purpose would be when using compensating factors while underwriting, lenders will be required to consider those factors which would be best predictive indicators of the performance of the loan.

My opinion : I guess I would have to wait for a better explanation letter in the mortgagee letter, if this is approved.  You already are required top have compensating factors when manually underwriting a FHA loan, making sure that the loan will perform. I just think this is FHA's way of saying that they want underwriters to be more critical when approving a loan and to have more solid compensating factors. Ex. Instead of making sure that your borrower had 2 months in reserves (money left over after closing to cover 2 mortgage payments), that they would like to see 6 months. Who really knows on this one. Could be more political chit chat.

 

 

 

Conclusion : As I mentioned above, I am not worried about numbers 1 and 3. But number 2 could have an impact on the housing market in many areas. On the positive side of things, HUD could have increased the down payment to 5%. This was talked about in congress several times, but shot down. Talk of FHA loans raising the down payment to 5%. -  Here is the argument about why some want more money down. The FHA argument - I want more skin in the game.

 

 

Where and how to comment :

Regulations.gov - (main site) please to search for government proposals.I give the specific page below, where to comment.

 

Here is the link to the different proposals and FHA's reasoning's for such proposals. Federal Register for HUD changes and the reasons why. If you go to the middle of the first page, you will see how they explain the different ways to comment. They highly suggest doing it electronically, which I mention below.

 

 

CALL to ACTION : Send this to other agents and loan officers.  Don't hesitate to reblog this, to get the message out.

 

Here is the actual page to go and make your comments - Comments for reduction of seller concessions and new loan to value with credit scores - Click submit a comment which is on the right side of this page, in blue.

 

 

 

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_____________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Show All Comments
Rainmaker
716,914
Juli Vosmik
Dominion Real Estate Partners, LLC, Scottsdale, AZ - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Thanks, heading there RIGHT AWAY

July 16, 2010 11:52 AM #1
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Kelly... thanks for getting the word out by reblogging this... and thanks for the reblog. And thanks for that polite shout out...

jeff belonger

July 16, 2010 12:05 PM #2
Rainmaker
51,717
Kelly Turbeville
Century 21 Award-Superstars - Lake Forest, CA
Real Estate Possibilities in the Saddleback Valley

Just helping spread the word, Jeff!

Juli thanks as well!

I agree with most of it, except as you noted point #2, I am concerned with this potential change.

 

July 16, 2010 01:19 PM #3
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Kelly...I wanted to pass this along, what I just wrote to counter some proposed changes.

My proposals to HUD/FHA -

Issues regarding the 3% seller help proposal by FHA - Can we fight FHA Loans with solutions?? - YES !!!

Please read this and help pass it along.... thanks

jeff belonger

 

July 17, 2010 01:22 PM #4
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Rainmaker
51,717

Kelly Turbeville

Real Estate Possibilities in the Saddleback Valley
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