From Alan Zibel at Associated Press: Federal Housing Administration to Raise Fees
The Federal Housing administration is raising fees and tightening lending standards.
A healthy FHA is vital for the housing market because it insures roughly 30 percent of new loans.
Home buyers will now be required to:
- Pay an upfront mortgage insurance premium of 2.25 percent of the total loan amount. Up from the previous amount of 1.75
- Need a credit score of at least 580.
- Borrowers with a score of below 580 will need 10 percent down.
From David Streitfeld at New York Times: F.H.A. to Raise Standards for Mortgage Insurance
Sellers will not be able to offer as much assistance towards their closing costs as they have in the past. The maximum amount of assistance will drop from 6 percent to 3 percent of the value of the property.
F.H.A. was insuring 5.8 million single-family residences that had a total loan balance of $750 billion. More than half a million of loans were seriously delinquent and heading toward foreclosure.
This couldn't come at a worse time. Tightening credit standards is not going to help. Things may improve over time, but it's going to get a lot worse before it gets better.
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