In 2007, the housing crisis happened making Federal Housing Administration mortgages possible to receive. To keep mortgage lending from stopping totally, the FHA helped people get loans. FHA mortgages are used in a third of the housing market today. There are more risks and delinquencies with those loans now. And The FHA’s reserve funds used to cover losses when borrowers default or go into foreclosure are shrinking. There will be a change soon so FHA mortgages aren’t so easy to get. Article resource – Expect tougher FHA mortgage loans due to rising risk of default by Personal Money Store.
Mortgage insurance for FHA gets hit hard
FHA mortgages weren’t a factor in the housing crisis, but its lax standards for mortgage insurance are a problem now. FICO scores were less than 500 for 6.2 percent, or 360,000 FHA loans, reports the Real Estate Channel. More than 37 percent of these loans are now at least 60 days delinquent, in foreclosure or in bankruptcy. During the housing crisis, the FHA helped 450,000 families keep their homes out of foreclosure in fiscal year 2009. 2010’s first quarter had the FHA helping 122,000 families keep their homes. As outlined by the Office of Comptroller of the Currency and the Office of Thrift Supervision, in 12 months, 67 percent of these loans had defaulted again. In May 2010, 555,000 FHA mortgages were delinquent more than 90 days.
Depleted FHA reserves force tougher terms
The FHA is safeguarding its Capital Reserve Account because from Sept. 30, 2008 to 2009, the account went down from $ 19.3 billion to $ 3.5 billion. As outlined by SmartMoney.com, a premium annual insurance for an FHA mortgage can be increased with a bill passed by Senate recently. For the 3.5 percent down payment, the FHA needs a 580 score. A credit score between 500 and 580 would require a 10 percent down payment to be made.
All new requirements for FHA mortgages
New FHA mortgage loan requirements will go into effect in Sept. 2010. According to Chicago 77, those buyers who can barely afford a home will no longer be able to get to that point. When buying a home, the FHA requires the buyer to pay a 1 percent insurance premium on the home. The good news is that this is down from the 2.25 percent at the moment required. The bad news is that the monthly figure will increase from .55 percent annually to .90 percent annually. Chicago77 shows what a $ 150,000 home purchase would look like:
Before Sept. 7 2010
Upfront Premium (2.25 percent): $ 3,256.88
Monthly payment including mortgage insurance: $ 793.93
On or after Sept. 7 2010
Upfront Premium (1.00 percent): $ 1,447.50
Monthly payment including mortgage insurance: $ 826.93
Net changes
Upfront cost: Decreased by $ 1,809.38
Monthly cost: Increased by $ 33.00
Additional reading
Real Estate Channel
realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-fha-mortgages-mortgage-backed-securities-mbs-federal-housing-administration-fha-department-of-veterans-affairs-va-congress-home-loans-keith-jurow-2969.php
SmartMoney
smartmoney.com/personal-finance/real-estate/the-fha-rethinks-its-mortgage-lending/
Chicago77
thechicago77.com/2010/08/major-fha-changes-coming-on-the-september-7th/
No comments:
Post a Comment