FHA Mortgage Guide

The big buzz in the world of real estate financing are the just-issued new loan guidelines by federal regulators.

This is important stuff because it will impact the ability of millions of people to finance and refinance their homes.

The new guidelines, entitled Statement on Subprime Mortgage Lending, give the FHA a pass. While critical of many current lending practices, the new guidelines say nothing about the FHA program for a very simple reason: It already makes a lot of sense.

With the FHA there are no surprise rate hikes, no prepayment penalties, no stated-income loan applications and no qualification standards based on anything other than a complete ability to repay the loan.

This is a case where the FHA and HUD deserve recognition for doing something right.

Unfortunately, the new and tougher standards will also limit the ability of many people to finance and refinance their homes. This is good for the lending system, good for borrowers in the long run but probably troubling for many borrowers in the short term. It’s a price that has to be paid for a lending system which between 2000 and 2006 became too loose — and thus resulted in an overly-large number of foreclosures and distressed borrowers.

Check out these FHA resources for more information

This entry was posted on Tuesday, July 3rd, 2007 at 1:31 am and is filed under FHA. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.