FHA Backs 30% of all loan in the U.S. makes signigifcant changes to increase it’s reserve

According to the Wall Street Journal on Sunday, August 15, 2010, “… FHA to hike the monthly fee to as much as an annualized 1.5% of the loan balance, up from 0.55%, though initially it will go only to 0.9%. The initial fee was increased earlier this year to 2.25% from 1.75%, though the FHA has said it will bring it down to 1% with the higher monthly fee. Even with the decrease in the upfront fee, increasing the continuing fee is expected to generate $300 million per month…”.

With regards to the credit score and down payment, “FHA would require borrowers to have at least a 500 score for FHA backing. At 580 and above, borrowers would be eligible for the 3.5% down payment. But those who fall between 500 and 580 would see their down payments jump to 10%.”

And finally, and perhaps most important, “Cutting sellers’ contributions… because it could nearly double their total upfront costs from just the required 3.5% down payment to a total 6.5%. Sellers have been able to contribute up to 6% of the price of the home toward the buyer’s purchase… As part of its proposed rule changes, the FHA wants to slice the seller’s contribution to no more than 3%”

These significant changes will most likely take effect on loans registered with their FHA case number as early as August, 2010.

Please, TAKE MY POLL:

Are you in favor or against thew new FHA changes?
(polls)


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About homesourcemortgage
Loan Officer

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