Inman News recently reported that the Federally Housing Administration (FHA) is inching closer to enacting several policy changes that may decrease the maximum seller concession of FHA loans from 6% down to 3% and raise the minimum FICO score requirement from 500 to 580**. The majority of the Nation’s largest lenders have already set their minimum FICO floor at 620 for FHA loans while American Financial Resources will still consider borrowers down to a 580 score. According to the article, policy changes are “aimed at curbing losses that have drained FHA’s Mutual Mortgage Insurance Fund, bringing its capital ratio below Congressionally mandated minimums. Other steps previously taken to stem losses during the downturn include a ban on seller-financed downpayment assistance, tightening of underwriting guidelines for streamline and cash-out refinance products, changes to appraisal standards, and increased oversight of lenders.”
The Department of Housing and Urban Development (HUD) recently published a notice in the Federal Register discussing the potential changes and the reasons why the policies are on the table. The article states that HUD will consider comments from the public prior to August 16, 2010 before publishing a final notice and setting a date for implementation of any defined changes.
Source of the Article: Inman News
**8/22/2011 Update: American Financial Resources is now lending down to a 600 FICO Score. This is subject to change – please call 800-316-9508 for current program requirements.
Related Blog Posts:
Drop in Consumer Credit Scores
When to Refinance
Financial Checklist
Tools for Managing Finances
Tips for the Final Walk Through
