Update on FHA Changes

On Friday, December 14 the senate passed a bill that would loosen underwriting guidelines and increase the loan size of our bright and beautiful FHA loan. It appears that Washington recognizes the woes created by subprime lending and our congressional friends want to offer support. It’s not a question as to whether this help is needed. During the five-year housing boom many consumers turned to Adjustable Rate Mortgages (ARMs) that will soon reset (if they have not already done so). With the new proposal on the table, we might see a lower down payment for FHA (if the Senate gets their way, even lower than today’s 3% required) and, the risk-based MI that I have referred to in a previous blog, will be delayed by twelve months.

Perhaps 1.8 Million Americans can exhale; that is the number of borrowers that will see their mortgage costs skyrocket before the end of 2008. Credit and underwriting guidelines have already tightened and many economists and analysts fear that a recession is heading our way.
But for now, we will keep our eye on the middle of the road and see where the Senate and House will meet. The White House has already said that President Bush will sign off on this bill which is also a relief. More updates to come.