On January 20th, the FHA announced major changes to ensure it’s long term financial soundness. Gee whiz, aren’t we all?
FHA announced changes in the following areas:
- The upfront mortgage insurance premium will increase to 2.25 percent up from 1.75 percent. For borrowers with downpayments of less than 20 percent this increase premium results in increased closing costs.
- Borrowers with a credit score below 580 will be required to have a 10% downpayment. The minimum downpayment will remain 3.5% for all other borrowers.
- Seller concessions will be reduced to 3% from 6%.
The FHA will make the following lender enforcement changes:
- FHA will implement credit watch terminations at lender underwriting.
- Public reporting of lender performance through a scorecard system will be implemented (What this means to the borrower is not included).
- FHA will implement indemnification against lenders. Indemnification will be expanded beyond fraud and misrepresentations.
- More stuff about enforcing and sanctioning lenders.
Thanks for the update FHA. We are juiced over this news!
For a realistic outlook on what this means to your home buying and financing strategies, call me! www.JosephCapote.com or (650) 269-3000.
Filed under: Buyer's Blog, FHA, FHA guiidline changes
Joe Capote 