Is HUD Gambling With the Housing Market?

On July 15, 2010 (75 FR 41217), HUD issued a notice seeking comment on three initiatives that HUD proposed would contribute to the restoration of the Mutual Mortgage Insurance Fund (MMIF) capital reserve account. On September 3, 2010 (75 FR 54020), HUD published a follow-up final rule implementing the proposal to introduce a minimum credit score and reduce the maximum loan-to-value ratio for FHA single family mortgage insurance. HUD is in the process of implementing another notice tightening the underwriting standards for mortgage loan transactions that are manually underwritten.

This announcement addresses the third proposal; namely, the proposal to reduce the amount of closing costs a seller may pay on behalf of a home buyer purchasing a home with financing insured by the Federal Housing Administration (FHA). HUD’s ruling will likely change the allowable seller concessions to from up to 6% of the sales price of a home to 3%, or $6,000, whichever is greater as not to penalize lower priced homes, the very market that FHA loans were meant to serve.

Alex Clavijo, a loan officer with Gateway Funding urges home buyers, home sellers and Realtors alike to call their state housing representative. Clavijo said, “As FHA originator, where FHA financing is my bread and butter, I can tell you that HUD’s ruling reducing seller’s concessions would not be beneficial to first-time home buyers as their biggest obstacle to buying a home tends to be coming up with the down payment money, let alone closing costs.” Angie Perez, Realtor and Broker Salesperson for Weichert Realtors in Edison NJ said, “More than 85% of my sales transactions have some form of seller’s concession, albeit a closing cost credit for unforeseeable home repairs. A reduction to this credit is a blow to the industry given FHA’s recent announcement of Monthly and Upfront Mortgage Insurance Premiums increasing on April 1st.”

“The last thing the real estate industry needs is another adjustment period,” said Perez who commented that on the brighter side, real estate investors and cash home buyers are reaping the rewards of lower real estate prices and the increasing demand for rentals properties.”

FHA seller’s concession reduction comment period is open till the end of Marc26, 2012 of which you can voice your opinion at regulations.gov.

FOR FURTHER INFORMATION CONTACT: Karin Hill, Director, Office of Single Family Program Development, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Room 9278, Washington, DC 20410; telephone number 202-708-4308 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800-877- 8339.

Post By Audeliz Angie Perez (160 Posts)

Angie Perez is a NJ Circle of Excellence award winning real estate agent for Re/Max Select in Westfield NJ. She sells anywhere from 12-25 houses per year on a consistent basis since 2005. Ms. Perez is primarily a buyer's agent on 60% of her real estate sales where she represents rental income investors, first time home buyers & trade up home buyers of 1-4 family homes within specific towns encompassing 4 NJ counties: Union, Essex, Middlesex and Somerset County. Many of Ms. Perez's clients appreciate her ability to negotiate favorable real estate deals for them. Many of her clients commented that her research abilities, her honesty, her knowledge of local market trends and her proficiency to manage multiple real estate transactions from start to close are some of the reasons why she was hired as their agent of choice. Please call, text or email Angie Perez to ask if she lists or sell in your town. If she can not help you, Ms. Perez would be more than happy to help or refer you to someone who can.

Website: → NJ Real Estate For Sale

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