January 30, 2010
FHA announced tighter lending requirements
FHA announced tighter lending requirements during the week of the International Builders’ Show, a move that spurred an immediate reaction from NAHB. As a means of strengthening its reserves in the face of rising foreclosures, the agency said it intends to raise Mortgage Insurance Premiums, increase downpayment requirements for those with FICO scores below 580 and reduce allowable seller concessions from 6% to just 3%. The changes to Mortgage Insurance Premiums will become effective this spring; other changes will likely go into effect by early summer. Responding to the agency’s actions, NAHB sent a letter to HUD Secretary Shaun Donovan seeking a meeting to discuss ways to ensure that the policy changes do not impede the ability of the FHA to insure loans for viable mortgage borrowers in the near term and the longer run. NAHB also issued a statement in which 2009 Chairman Joe Robson said, “NAHB understands the need for the FHA to respond to developments in its portfolio that will enable the agency to continue to operate on a sound financial footing. At the same time, the FHA is an indispensable source of financing for America’s home buyers and must fulfill this vital mission at this fragile juncture. NAHB looks forward to working with the agency to ensure that it maintains its central role in the nation’s housing finance system and provides homeownership opportunities for millions of creditworthy borrowers.” We will keep you informed via this report as the latest developments unfold.
Contact: jen@hbade.org.
