Hot off the press from Bloomberg about FHA financing. FHA finacing has become very popular since the ‘credit crunch’ and the decline in the number of programs being offered to buyers with minmal money to put down. If you are thinking of buying and want to put down as little as 3.5% now is the time…read more for details.
Dec. 2 (Bloomberg) — Homebuyers seeking to take advantage
of a government mortgage-guarantee program will have to put up
more cash in some situations
as officials look for ways to shore
up finances at the Federal Housing Administration.
“We have made the decision to exercise our authority to
increase the up-front cash that a borrower has to bring to the
table in an FHA-backed loan, to make sure that FHA borrowers
have more ‘skin in the game.” Housing and Urban Development
Secretary Shaun Donovan said in prepared testimony to the House
Financial Services Committee in Washington today.
“There are several ways to accomplish this, and so we are
currently analyzing various options to determine which is the
most effective and consistent with our mission,” he said.
The FHA is considering cutting the amount of home seller
concessions a buyer can receive by half to 3 percent of the
purchase price to combat inflated appraised values. The minimum
credit scores required for borrowers may also be raised, and the
guarantee fees charged to lenders may increase, Donovan said.
“We expect to provide detail and public guidance for these
changes by the end of January,” Donovan said.
The FHA’s mortgage insurance reserves fell to the lowest
level in history last fiscal year and the government said more
steps are needed to shore up the agency that guarantees one of
every five single-family loans. The insurance fund tripled in
size last year and has taken on more risk as private industry
sources for lenders to finance and insure home loans dried up
and mortgage default rates rose to record highs.
The agency, part of the Housing and Urban Development
Department, may raise the up-front insurance premiums of 1.75
percent that it charges lenders to guarantee the loans, Donovan
said. The agency is seeking permission from Congress to increase
its annual insurance rates as well, which will raise mortgage
costs for consumers, Donovan said.
FHA’s net capital ratio, or reserves after accounting for
projected losses, fell to its lowest level on record, 0.53
percent, in the year ended in September, from 3 percent in
fiscal 2008 and 6.4 percent in 2007, according to an annual
review released last month.
FHA, along with federally controlled mortgage-finance
companies Fannie Mae and Freddie Mac, accounted for more than 90
percent of all U.S. home loans in the first half of this year.