FHA has announced that they will be tightening their lending guidelines in 2010. The changes are designed to strengthen FHA reserves. Due to the increase in foreclosures, FHA reserves have dipped down to just .53% of the value of insured loans. Congressional legislation requires that they keep their reserves at least 2%.
Now, you might think that the foreclosures causing the changes were caused by the aggressive lending practices that once existed. It is surprising to learn that 20% of all new mortgages (read: made after the real estate bust and mortgage market implosion) are actually in some stage of default.
Under the new guidelines, borrowers with scores less than 580 will be required to put at least 10% down. The 3.5% required down payment will remain for borrowers with credit scores above this. While it is a relieve to some that bad credit mortgages still exist, it will certainly be more difficult for many to get into a home.
Seller concessions will be reduced from a maximum of 6% to a maximum of 3%. Another major change is that the required mortgage insurance premiums will be increased by 50 bps, going from 1.75% to 2.25%. These two changes will cause a significant increase in the amount of cash that borrowers must bring to the table.
There is some debate as to how much the new guidelines will really impact the mortgage industry. After all, in early 2009, most banks shifted their underwriting guidelines to not make loans to individuals with credit scores below a 620. (Remember – the FHA insures loans that meet their guidelines but it does not underwrite them. The individual lenders are the ones who underwrite the loans.)
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FHA 2010,
FHA Guidelines
It goes without saying that 2009 was a difficult year for the mortage industry. While their were once numerous option for those seeking a bad credit home mortgage, FHA became the go to product for those with less than perfect credit. Even then, the minimum credit score required soared up to a 620.
So, what is in store for FHA loans and the mortgage industry in 2010? Read on to find out!
FHA Updates Policy. Not Good News for First Time Buyers.
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FHA LOANS THE NEW SUBPRIME ALTERNATIVE?
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Lots of Investor Updates; YSP & HVCC Chatter; GSE Portfolio Size …
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New FHA Rules Effective January 1, 2010
New FHA rules for appraisers take effect on January 1st. Almost all of the rules are identical to the current HVCC rules, with slight differences. Don’t miss out on ordering your AMC list so you can receive the orders from FHA that will …
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bad credit home loan mortgage,
bad credit home loans,
bad credit home mortgage
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