As a supplement to this post and this post, WSJ.com published this article a few minutes ago in which they report that the FHA will tighten credit standards in order to improve it’s mortgage insurance performance. No details on when these new rules will become effective. Here is a quote from the article in which new measures are outlined:
Under planned new rules, the FHA said lenders making FHA-insured loans will need to show net worth of at least $1 million, up from $250,000, and further increases may be sought later. The agency is seeking to ensure that lenders will have funds available to compensate the FHA if their loans fail to meet quality standards.
The FHA also will stop certifying mortgage brokers to handle FHA loans. Instead, the lenders that underwrite and fund those loans will be responsible for policing brokers and paying for any failures to meet standards.
For refinances of FHA loans, the agency will make new requirements for verifying income and other quality-control checks. It also will impose a maximum loan value of 125% of the current estimated home value on refinanced loans, in line with government-backed mortgage investors Fannie Mae and Freddie Mac.
The FHA plans to make its rules aimed at averting pressure on appraisers more consistent with those adopted earlier this year by Fannie and Freddie. Mortgage brokers or bank employees paid on commission won’t be allowed to order appraisals. Appraisals will be valid for no more than four months, down from six to 12 months previously.