Wednesday, July 14, 2010

FHA Seeks Comment on Proposed Changes in Allowable Seller Concessions, Minimum Credit Score, and LTV's for Different Credit Scores.

Tomorrow's FR will have formal Notice for comment for 30 days. After that date HUD will consider comments and then publish final determination in FR, with an effective date for changes.

FR advance copy (with link that may be live for today only) is HERE. (Check FR tomorrow [Thursday] for formal publication).

My summary of proposed changes
  • Max Seller Concessions reduced from 6% to 3%.
  • Minimum credit score of 500.
  • Max LTV:
  • Credit Score of 500-579=90% LTV
  • HUD MAY adopt a temporary exception to this LTV restriction for refinances, but only after publication of separate notice. 
  • Changes to manual underwriting requirements (see page 18 of draft notice).
This HUD Notice also includes some useful background about default rates for borrowers with different credit scores as well as background on other changes designed to increase FHA fund solvency.

Originally created and posted on the Oregon Housing Blog.

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