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In The Home
Mortgage News
CHANGES COMING TO FHA
More FHA lending changes are coming our way in the very near future. Here is "the bottom line": HUD Secretary Outlines FHA Policy Proposals in Congressional Testimony. On December 2, Shaun Donovan, Secretary of Housing and Urban Development (HUD), testified before the House Committee on Financial Services to address several policy proposals for improving the financial performance of the Federal Housing Administration (FHA). Secretary Donovan testified that the FHA plans to improve enforcement of its lending policies. In this regard, the FHA intends to hold lenders responsible for loan losses by making them indemnify the FHA fund whenever loans are not underwritten to FHA standards. Additionally, the FHA intends to track lender performance through a Lender Scorecard that will summarize the performance of each lender that does business with FHA and will be available on the FHA website. In addition to these enforcement measures, the FHA also plans to tighten its underwriting standards. These measures would include (i) reducing the maximum permissible seller concession from 6% to 3%, (ii) raising minimum FICO scores for new FHA borrowers, and (iii) increasing the borrower's up-front cash requirement. Additionally, the FHA is investigating whether it should increase mortgage insurance premiums. For a copy of Secretary Donovan's testimony, please see http://portal.hud.gov/portal/page/portal/HUD/press/testimonies/2009-12-02
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