In 2010, FHA issued a fairly detailed document that outlined changes they felt were necessary to keep the Capital Requirements of the fund solvent. Those changes updated minimum credit scores accepted, and corresponding downpayment requirements for those with very low scores. Additionally, FHA proposed limiting Seller Concessions with FHA loans. Since then they’ve been gathering data and comments on Seller Concessions, but no defining underwriting guidelines emerged.
Recently HUD published a “Revised Proposal for Limiting Seller Concessions” that was open for comments until March 26, 2012. In the proposal, HUD is suggesting that Seller Concessions be reduced from the current 6% to three percent or $6,000, whichever is greater. Obviously, if you are receiving $6,000 from the Seller, and your closing costs total $5,650 (For example) the lower, actual cost would be the most a Seller could contribute.
HUD also proposes limiting acceptable uses of seller concession to payments toward borrower closing costs, prepaid items, discount points, the FHA Up Front Mortgage Insurance Premium, and an Interest Rate Buydown.
The significance of this last part is probably a tripping point for many Sellers, because it does not seem to address the repairs or appliance packages (and other builder Concessions) we routinely see added on contracts. The final commentary on these proposal will likely come out on July 1, when the revised Guidelines for Collection Accounts is due.
If you have questions about qualifying for a FHA mortgage loan in NC – Call Steve and Eleanor Thorne 919 649 5057, we have the best rates, and we know the guidelines! Connect with us on Facebook, Twitter or Google +