The Department of Housing and Urban Development recently announced changes to borrower guidelines for FHA loans. The industry had been bracing itself for “adjustments” that threatened the ability of many first time home buyers to achieve their goal of homeownership.
The changes that were announced, appear to balance the need for credit availability and the risk to the MI fund.
Here’s a nice summary from Mortgage News Daily:
Some FHA lenders out there had feared the potential changes that HUD and FHA could make to their program would end up being their funeral. That turned out not to be the case, and there has been a good amount of analysis of the changes. The underwriting changes by the FHA include increases in the MI premium, an increased down-payment requirement for low FICO borrowers, a reduction in the ability to roll closing costs into the loan, and increased lender recourse to FHA lenders. What they don’t include, of course, is a program-wide minimum FICO, or program-wide increase in the down payment. Generally speaking, most agree that the changes announced to FHA underwriting seem to be less restrictive than anticipated and more supportive of mortgage credit availability and the housing market at the expense of minimizing losses to the MI fund.
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