AgentMortgage

Sizing up new FHA requirements

Worries about oversight, maximum debt ratios persist

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With the housing market slumping badly after the first-time homebuyer tax credit met its final days, one would think that things couldn't get any tougher for real estate brokers over the near term. But market participants are closely eyeing the changes from the Federal Housing Administration to gauge possible impacts. Why should brokers worry about the FHA? The obvious answer is: The FHA insures about 30 percent of all home loans in the United States and whatever changes it makes reverberates throughout the housing market. New FHA borrowers are required (as of Oct. 4, 2010) to have a minimum FICO score of 580 to qualify for the minimum 3.5 percent downpayment. New borrowers with a FICO score between 500-579 must now put down at least a 10 percent downpayment, and those with FICO scores below 500 can't qualify. I spoke to Gibran Nicholas, chairman of the CMPS Institute, an Ann Arbor, Mich.-based organization that trains and certifies mortgage bankers and brokers, and he's...