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Inside FHA/VA Lending

September 25, 2009

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FHA Toughens Up as Reserve Fund Drops

The FHA is taking major steps this week to tighten its standards for lenders participating in the booming program on the heels of preliminary reports that its reserve fund to cover loan losses has fallen below minimum levels set by Congress. FHA Commissioner Dave Stevens said late last week on a conference call that he has been working on the program changes since he took office in July, but the... Read More

FHA Lenders to Be Responsible for Broker Actions

The FHA plans to propose new rules that will require wholesale lenders to take responsibility for bad loans originated by mortgage brokers, and brokers will no longer be independently approved as FHA correspondents. FHA-approved lenders will also be subject to higher net worth requirements under the changes, which will be pursued by a rule-making process. Lenders with FHA approval would have to assume... Read More

Procedural Changes Made to FHA Appraisals, Refis

FHA mortgage originators will now have to follow appraisal rules similar to Fannie Mae and Freddie Mac’s Home Valuation Code of Conduct thanks to a swath of changes implemented by various mortgagee letters this week. All the changes take effect for case numbers assigned on or after Jan 1.Historically, the FHA prohibited lenders from accepting appraisal reports completed by an appraiser selected in any manner... Read More

Additional HUD, FHA Resources Move in Congress

The House of Representatives passed a bill last week that would bolster the FHA’s resources and risk management systems, and the Senate approved its version of fiscal 2010 HUD appropriations that would provide more funding for the agency. Meanwhile, the FHA implemented changes in this year’s Helping Families Save Their Homes Act in a mortgagee letter this week. The 21st Century FHA Housing... Read More

Reg Z Prepayment Rules Conflict with Ginnie Mae

Inside FHA Lending has learned that industry groups are asking government officials to address an unanticipated outcome of a new Federal Reserve rule that may result in some FHA loans being classified as higher-priced loans. FHA loans commonly permit interest to be charged through the next installment due date after the loan is fully repaid. If the loan is prepaid before a normal installment... Read More

FHA Average FICO Score Nears 700

While many mortgage industry participants are worried about the increasing default rate on FHA loans, one positive sign for the agency is that the average FICO score of FHA borrowers is at an all-time high, 692 for loans endorsed in August. The average FICO score for FHA purchase loans and refinances hit 697 and 678 in August, respectively, both record highs. “The 2009 book of business is significantly... Read More

FHA Briefs

The FHA decreased by 10 percent the amount seniors can claim in cash withdrawls under a Home Equity Conversion Mortgage late this week. The principal limiting factor, which determines the amount of equity that can be withdrawn on a HECM, is based on the age of the youngest borrower, the expected average mortgage interest rate and the maximum claim amount. The new factors must be used for all HECMs case filed... Read More

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