FHA Standards To Tighten On January 1
September 30th, 2009 categories: Buyer Resource, Seller Resource
FHA Loan standards will change on January 1st, 2010. Change…hmmm…does that mean better or worse? It all depends on how you look at it I suppose.
Some people do not like change. Admittedly, depending on the situation, I am one of those people. In this case, the FHA is “aligning” credit standards and appraisal rules. “Aligning”? That does not sound SO bad, but we all know that they mean tightening credit standards, and adding more appraisal rules. This will likely slow the borrowing process somewhat, and also likely shut the door on some would be FHA borrowers, forcing them into loans that require more of a down payment. With savings rates at all time lows nationally, this may shut the door on the homeownership dreams of some…at least for now.
For the taxpayer it is good. With stricter measures for FHA loans and appraisals, the chance for defaults should decrease, putting a lighter burden on tax payers. We understand that the FHA sees this as a necessary step, but from our perspective it seems like it will make a very affordable loan program that much harder to utilize; potentially slowing the pace of Real Estate sales.
Nationally, we read that 1 in 4 loans is an FHA loan…here in Sonoma County it seems like 1 in every 2 loans is an FHA backed product…this could have large impacts here and beyond.
As always…we will keep you posted on any future “changes.” We will definitely be keeping our eye on how these changes impact the industry. Please visit Sonoma County Interest Rates to stay on top of all Sonoma County Interest Rate News.
