FHA Guideline Changes Incoming
FHA has a problem. There is a Congressionally mandated reserve amount for covering bad loans that is fast approaching. 17% of FHA loans are in foreclosure, compared with 13% of the entire market. Thus, FHA’s cash reserves as a percentage of their loan portfolios has declined below acceptable levels. As a result, change is coming:
- FHA will hire first Chief Risk Officer in almost 75 years.
- FHA will increase audited financial net worth requirement of approved FHA lenders by 4x – from $250,000 up to $1 million.
- FHA will increase minimum credit score standards.
- FHA will enact New requirements for ordering appraisals. Not quite HVCC-strict, but closer.
- FHA will now require income verification on Streamline FHA refinances.
What does this mean? Those buyers on the brink of qualifying might lose their ability to buy a house due to credit restrictions. I would also expect to see tightened loan guidelines beyond just credit – big losses usually points to stricter standards.
The good news: Premier Mortgage isn’t going anywhere and can still do FHA loans. Our FHA appraisals still only take a few days…AND I can still qualify buyers who are close to debt-to-income limits using the PDC’s Mortgage Credit Certificate program. If someone can’t quite afford a home, let me know and I’ll see what we can do.
If you are interested, check out the full HUD press release.
Note: These changes won’t take place until January 1, 2010, so there is some breathing room still. Then again, that’s only 3 short months away.
