Tougher Rules Coming for FHA Mortgage Applicants – Charlotte NC Real Estate and Finance

FHA-insured home loans have become extremely popular.  Since 1983, the Federal Housing Administration, which is part of HUD, has been helping people fulfill the “American dream of home ownership.”

By insuring loans, lenders have been able to offer better deals with easier credit qualifying along with lower down payments and closing costs. However, tougher rules are on the horizon for 2010, making FHA-insured home loans pricier for borrowers and more difficult to get.

Expected FHA-insured Loan Changes

According to HUD Secretary Shaun Donovan, the housing crisis has severely impacted the agency’s reserves, falling to 0.53%, which is below the 2% level required by law.

• FHA Commissioner David H. Stevens and Donavon want borrowers to pay more upfront in order to minimize default risks.
• Along with increased down payments, the FHA is considering toughening up underwriting standards and cracking down on lenders who send poorly underwritten loans to insure.
• The FHA is also considering tying payment requirements to credit scores and implementing a minimum acceptable FICO score requirement, which will probably not be much lower than Fannie Mae’s or Freddie Mac’s 620 FICO minimum.
• Another expected change is cutting “seller concessions” from 6% to 3% of the loan amount.

Housing Market and Economic Recovery

NAR President Vicki Cox Golder believes the FHA program needs enhancements not major reform and urges Congress to take steps that will have the least impact on borrowers who are key to of our economic recovery.

“The Federal Housing Administration mortgage insurance program is a critical part of the American housing fabric and has never been more important than it is in today’s market,” says Golder.  She also pointed out that without FHA mortgage insurance, our housing market could never begin to recover.

NAR is not in favor of the “FHA Taxpayer Protection Act of 2009,” which would require borrowers under FHA-insured mortgages for single-family housing to make down payments of at least 5 % and prohibit financing of closing costs under such mortgages. They believe it will make home ownership prohibitive for many borrowers that have good credit.

Charlotte North Carolina Real Estate For Sale

If you are looking to buy property in Charlotte NC, it’s never been a better time for first time home buyers to get an FHA-insured loan before more stringent requirements and higher costs go into effect in the coming year.

Leigh Brown, Charlotte, NC’s premier real estate agent and FHA loan expert can help you find the home you’ve always dreamed of. You can reach Leigh by filling out the contact form or by calling her at (704) 688-5005 or (866) 440-7136 toll free.

Sources:
RISMedia
BusinessWeek