REO Proteams: Las Vegas Real Estate News

The Federal Housing Administration FHA is trying to shore up its finances by hiking fees and imposing stricter rules for mortgage modifications. Loses are mounting as foreclosures and housing problems continue to rise. The government agency has been instrumental in stabilizing the volatile and struggling housing sector. Currently, the agency is the biggest insurer for first time buyers and has played a vital role of rescuing millions of homes from foreclosure.

In a statement made by FHA Commissioner David Stevens, the new guidelines which are set to take effect in the early part of this year represent the most significant steps to address risk in the agency’s history.

New changes maybe a strong pill to swallow for many mortgage lenders. But the FHA reiterates that these are necessary to make sure that only qualified homeowners avail of the program. Funding continues to be a problem and the recent spate of failures have steadily drained the agency’s coffers.

More problems plague the agency as some mortgage banks and companies have been accused of taking advantage of the program. Subpoenas were served to 15 mortgage companies last week which had high default on their FHA loans. This is part of the government agency’s effort to crackdown on non-performing mortgage companies and lenders.

Program Benefits:

• Lower mortgage costs. Homeowners who are able to lock in an FHA loan have smaller mortgage costs. This is because mortgage companies are able to offer lower interest rates with FHA backing.
• Better Protection. Homeowners who have FHA loans are more protected against foreclosures. Loans are backed by the FHA, making them qualified for government sponsored rescue programs.
• Easy and low downpayment rates. The program offers homeowners a 3.5 percent downpayment on the total loan amount.
• Easier qualification and requirements. It is far simpler to qualify for a home loan compared to traditional non-FHA loans. Requirements such credit scores are lower compared to those in private mortgage companies. Homeowners are also able to lock down better mortgage rates even with lower credit scores.

New Guidelines:

• Homeowners wishing to qualify for the program are now required to make an upfront payment of 2.25 percent for the mortgage insurance premium compared to the 1.75 percent previously needed. However, this is expected to rise as the agency is currently asking congress to raise the maximum amount they can charge.
• The FHA has also set credit scores higher, homeowners are now required to get a credit score of at least 580 to fall under the program. Although those who still wish to avail of the program may do so by giving a 10 percent downpayment.

Reported by REOProteams

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