Major Changes Brewing at FHA

On Friday, Jan. 15 NAR sources in Washington D.C. indicated that FHA is about to announce the following changes to its purchase finance programs.

Borrower Issues:

Borrowers will be unable to finance upfront premiums;
Seller concessions will be reduced from 6% to, possibly, 3%;
Borrowers must have a minimum FICO score and their maximum loan-to-value ratio may be impacted by their FICO score; and Mortgage Insurance Premiums may be raised from their current 1.75% level.

Lender Issues: While the final lender eligibility rule has not been published, NAR is reporting the following proposed changes for FHA lenders:

Increasing net worth requirements of lenders to $2.5 million over the next 3 years; 20% of lender net worth must be liquid assets; and Increased default monitoring by lender underwriters.