Skip to main content

FHA LOAN STANDARDS GETTING TOUGHER

At the same time that conventional lenders are starting to show interest in the Chicago condo market, FHA seems to be pulling back a little bit.

On Friday, FHA announced plans that will tighten many lending standards, some outline below. This action is thought to be a pre-emptive effort as FHA will soon notify Congress that its capital reserve ration is dropping below 2% - the minimum threshold mandated in the legislature.

Under the announced changes:
  • Refinance loans will require tighter income & asset verifications and quality controls
  • Appraisals will be required whenever a borrower wants to add closing costs to the transaction.
  • Mortgage brokers will be prohibited from ordering appraisals, but will not be required to use appraisal management companies. (changes here are consistent with the Home Valuation Code of Conduct, or HVCC).
  • Appraisal reports will only be valid for 4 months, down from 6.
There are a couple of less restrictive changes proposed too:
  • Appraisals will be portable (a borrower can ask one firm to turn over an appraisal report to another if he/she decides to change lenders. In some circumstances, they will be allowed to order a 2nd appraisal.
  • FHA approved lenders must will have to prove more than $1,000,000; up from $250,000.
  • FHA supervised lenders will be required to submit annual audited financial statements to assure their financial stability (WAIT - they don't already require this?)
  • Mortgage brokers on the other hand, will not have to file financial statements, meet net worth requirements or register directly with the FHA. Instead, the FHA direct endorsement (approved) lenders they deal with will have guaranty all brokered loans.

Comments

Popular posts from this blog

The Equifax data breach and you — 6 steps to take now

Identity thieves hit a major credit reporting agency—hard. Millions of consumers’ confidential identity information has been compromised.

Equifax, one of the big three credit reporting agencies announced that a massive security breach took place earlier this year. Offenders accessed data sets of 143 million US consumers.

What to do when drones fly near your home

Imagine a quiet evening on the deck of your new home when—out of nowhere—a noisy drone begins hovering around your property, almost certainly snapping photos or video. It’s like Space Invaders meets Gladys Kravitz. So what do you do?

Help! My Neighbor’s Old Tree is Growing Over my Roof

Let’s say about 100 years ago, a family planted an oak tree on the edge of their property. Over generations it’s grown into a magnificent tree that provides summer shade, autumn color and a swing for the neighborhood kids. You probably even liked the tree when you bought the house next door to it.

But today, its root system is invading your basement, its acorns bombard your yard and its huge limbs loom threateningly over your roof. By law, can you cut it down? Trim it? Turn it into a boat?