New FHA Criteria (concessions, agency, Realtors, insurance)

[DMenscha]

From my state association of Realtors;

Policy changes include:

Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent. HUD is expected to release a Mortgagee Letter on Jan. 21 making the premium increase effective in the spring.


Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take effect in early summer after it goes through the normal regulatory process.


Reduce allowable seller concessions: The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit. FHA expects this to take effect in early summer after it goes through the normal regulatory process.

FHA 90-day anti-flipping rule waived
The Dept. of Housing and Urban Development (HUD) announced Friday it will eliminate for one year the Federal Housing Administration (FHA) 90-day anti-flipping rule.

FHA’s anti-flipping rule generally prohibits insuring a mortgage on a home owned by the seller for less than 90 days. That rule already has been waived for certain transactions, including REOs. Beginning Feb. 1, buyers may use FHA-insured financing to purchase properties resold through private developers and investors. This one-year waiver will give FHA buyers access to a broader array of recently foreclosed properties.

Under the temporary waiver, all transactions must be made at arm’s-length and may require additional documentation of improvements and justification of certain price increases. Additional documentation may include a second appraisal and a property inspection ordered by the lender.

[Silverfall]

I read somewhere that the 90 day flip will have the following conditions: that the sales price can't be increased by more than 20% unless extensive rehab work was done, which is what that second appraisal/inspection is for.

It is still risky for flippers who do extensive rehabbing because you don't know what that second appraisal/inspection will do, but at least it's a move in the right direction to help the serious investors move houses.