FHA Considering “Tightening the Belt” – do not make it harder for buyers to borrow!
The FHA reserves are below the required minimum, and here are some of the Housing and Urban Development (HUD) Secretary Shaun Donovan’s recommendation to correct that issue:
- Raise the required minimum down payment from 3.5% to 5%
- Lower the maximum seller contribution from 6% to 3%
- Establish a required minimum credit score
- Eliminate the ability to finance the Up Front Mortgage Insurance Premium (UFMIP) into the loan
- Raise the cost of FHA mortgage insurance (higher premiums)
According to Vicki Cox Golder, President of the National Association of REALTORS, “FHA’s decline in reserves is in part a reflection of a projected change in home price values, and is not tied to excessive increases in defaults or unsound underwriting practices.” In citing the recent FHA audit, Golder said, “If FHA makes no changes to the way it does business today, the reserves will actually exceed 2 percent in the next several years. FHA has sufficient reserves.”
Let’s discuss a little history of the FHA (Federal Housing Administration).
Created in 1934 to help our country recover from the Great Depression, the FHA encourages growth of our housing market and stabilizes it during difficult times. It has helped millions of people enter the home-ownership market who would otherwise never be able to afford to own a home.
So when our country is in a state of recession and continued unemployment, the FHA is considering making it more difficult to purchase a home??? Leave the requirements as they are so that FHA financing can continue to do what it was intended to do – make more affordable mortgage financing available to homeowners.
Lori Cain is a residential Realtor with Chinowth & Cohen Realtors serving the greater Tulsa Oklahoma area, including midtown Tulsa, Owasso, Broken Arrow, Bixby, Sand Springs and Jenks. Please visit Lori’s web site, LoriCain.com or call 918-852-5036.
