Mortgage Daily Logo

Small Cut in LTV Could Have Big Impact on FHA

FHA News

The head of the Federal Housing Administration warns that lowering the loan-to-value on FHA loans — even just a little — would wipe out 40 percent of FHA originations.

FHA Commissioner David H. Stevens gave that assessment today in testimony before the House Financial Services Subcommittee on Housing and Community Opportunity.

The commissioner highlighted suggestions by some to raise the minimum downpayment on all FHA loans to 5 percent.

He said FHA analyzed a large sample of previously endorsed files to identify how many borrowers had the additional 1.5 percent available at the time they closed their loans.

“Such a policy change would reduce the volume of loans endorsed by FHA by more than 40 percent, while only contributing $500 million in additional budget receipts,” Stephens testified. “This translates to more than 300,000 fewer first-time homebuyers and would have significant negative impacts on the broader housing market — potentially forestalling the recovery of the housing market and potentially leading to a double-dip in housing prices by significantly curtailing demand.”

He said that downpayments should be increased to 10 percent just for borrowers with FICO scores between 500 and 579.

Testimony today by Mortgage Bankers Association President and Chief Executive Officer John A. Courson indicated that his group supported higher FHA downpayments, but only for borrowers with credit scores below 580.

Related Posts

Best Mortgage Lenders By Category

Best Mortgage Lenders By Category

A report based on a recent survey of consumers who were shopping for a residential loan has identified the best home lenders in a variety of categories -- including government programs, jumbo loans and online services. The 10-question survey of prospective mortgage...

Best Mortgage Lenders By Category

FHA Endorsements Edge Higher, Book of Biz Grows

Monthly residential government-insured mortgage production was nudged up, though commercial real estate endorsements plunged. The book of business continued to grow. At the end of August, the Federal Housing Administration had insurance in force on 8,622,052...

Best Mortgage Lenders By Category

FHA Endorsements Inch Up, Might Rise More

Monthly Federal Housing Administration business inched higher and might accelerate further. Delinquency turned sharply higher, and reverse mortgage production was the slowest it's been in four years. But commercial mortgage endorsements doubled. As the first half of...

Best Mortgage Lenders By Category

SF Endorsements Up, Delinquency Down at FHA

Monthly new business was moderately higher in the Federal Housing Administration's residential business, while loan performance improved. But commercial mortgage endorsements plunged. Data reported by the Department of Housing and Urban Development indicate FHA...

Best Mortgage Lenders By Category

FHA False Claims Actions Among Industry Concerns

Among the concerns shared by attendees at a recent secondary marketing conference is the legal uncertainty accompanying government-insured originations. A majority want a company-wide production management dashboard. The Mortgage Bankers Association hosted its annual...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI