The Federal Housing Administration is proposing some changes to its program rules that might impact or affect some loan applicants in 2013. These are designed improve revenue flows to the agency and cut back on losses. Although none of these appear to be “set in stone” quite yet, prospective FHA buyers may want to take action quickly, because if the changes do take place, they will be immediate. So, here’s your warning!
FHA Has A $16.3 Billion Loss In The Monthly Mortgage Insurance Value most of the reasons for the $16.3 Billion loss was because of mortgages written between 2005 to 2009, and there is very little that we can do about those mistakes now. The proposed FHA changes below are expected to be implemented in January of 2013, and continue to be implemented though the 1st Quarter.
FHA Proposed Changes For 2013
- Raise Monthly Insurance Premium (MIP) by 10 bps, it is presently 1.20 & 1.25
- Eliminating MIP cancellation policy on new mortgages
- Implement Housing Counseling
- Increase the number of modification programs now offered by FHA, and bring them more in line with those offered by HAMP
- Improve the resolution process for negative-recovery mortgages
- Improve and increase the number of note sales
- Request Congress for additional Legislative Authorities to protect the Fund
- Enabling FHA to treat all FHA approved lenders equally with respect to non-compliant loans
- Strengthens FHA’s indemnification authority by eliminating the knew or should have known requirement for fraud
- Request Congress for the authority to terminate Lenders with default rates significantly higher than other Lenders
- Request Congress for more authority to manage the Reverse Mortgage program, to better protected Borrowers in maintaining their Reverse Mortgage.
In a time that we need to be finding ways to stimulate the Real Estate Industry, a number of the proposed changes above will only accomplish slowing it down further. New Borrowers already have to many artificial cost included in their mortgages, and several of the proposed changes above will only further increase those costs. What we need for FHA and Washington is to seek is real solutions from those in the Lending Industry that have first hand experience with what is wrong, and know what is needed to fix it. What we need is the use of common sense, and a lot less of overreacting.