FHA proposes policy changes to weed out abusive lenders

Miami /
Dec.December 02, 2009 01:41 PM

In an effort to regain lost finances from abusive borrowers and lenders, the Federal Housing Administration is proposing to change some of its policies. FHA officials want to increase the amount of cash borrowers need to pay upfront, which is currently set at only 3.5 percent of a FHA-backed loan. And although one lawmaker has introduced a bill that would raise the minimum down payment to 5 percent, an official number has not yet been set. Other rumored changes include raising the minimum credit score for borrowers who receive FHA-backed loans, which is now at a low 500 points out of 850. Officials also want to limit the amount of seller concessions, like paying closing costs or giving free upgrades, which is currently set at up to 6 percent of the home’s value. Housing and Urban Development Secretary Shaun Donovan said he wants the maximum value lowered to 3 percent and he plans to announce other policy changes when he appears before the House Financial Services Committee next Wednesday. These strict changes come on the heels of an audit released last month which show that the agency’s cash reserves have shrunk to a level far below what is required by law, and the agency could need taxpayer funding if it keeps losing money.


Related Articles

arrow_forward_ios
Developer Jeffrey Soffer and the JW Turnberry resort at 19999 West Country Club Drive in Aventura (Getty, TripAdvisor)
Jeffrey Soffer’s Turnberry Isle resort scores $412M refi from Bank of China
Jeffrey Soffer’s Turnberry Isle resort scores $412M refi from Bank of China
Brightline CEO Patrick Goodard with the Fort Lauderdale station (Brightline)
FECI obtains $200M in financing tied to sites near Brightline stations
FECI obtains $200M in financing tied to sites near Brightline stations
South Florida lenders and landlords battle new coronavirus reality
South Florida lenders and landlords battle new coronavirus reality
South Florida lenders and landlords battle new coronavirus reality
Dan Gilbert and 100 El Bravo Way (Credit: Getty Images and Realtor)
Company tied to Quicken Loans buys Palm Beach estate for $25M
Company tied to Quicken Loans buys Palm Beach estate for $25M
(Illustration by Andrew Colin Beck)
Who will be the winners and losers of the next recession?
Who will be the winners and losers of the next recession?
Bal Harbour Shops, Matthew Whitman Lazenby, Erica English, Howard Friedberg and Michael Katz
Whitman scores $550M loan for Bal Harbour Shops
Whitman scores $550M loan for Bal Harbour Shops
Marc Suarez, Director at Hunt Real Estate Capital and a rendering of Boardwalk 280
SH Communities scores HUD financing to build Miramar apartments
SH Communities scores HUD financing to build Miramar apartments
Hurricane damage in Florida (Credit: iStock)
“No one should be lending for 30 years in most of Florida,” financial climate analyst warns
“No one should be lending for 30 years in most of Florida,” financial climate analyst warns
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...