New FHA rules

[Mickey11]

I've seen that word tossed around and I must have missed the announcement, can anyone explain what's changing and when?

[MovingForward_2012]

On June 1, 2013, all FHA loans with less than 10% down will require mortgage insurance be paid for the life of the loan. Mortgage insurance will no longer be canceled when the loan amount is 78% of the original amount. The good news is they brought back the mortgage insurance deduction that can be used when you file 2012 taxes.

They are also requiring manual underwriting for scores under 640 and the Broker or LO will have to explain why a particular person is a good candidate. This is the really bad one as most lenders will probably just raise the score requirement to prevent the hassle.

I think there are some other less dramatic changes that I can't remember right now. Others will comment and help me out.

[jordanmedical]

Isn't all UW Manual? Or am I missing something here?

[JM-AM]

The New Rule will also raise the cost of how much you pay for MIP, which will start before June 1, 2013.

[ShanetheMortgageMan]

Was discussed in-depth previously at FHA updating policies

Mandatory manual undewriting only applies for lower than 620 FICO & greater than a 43% DTI.

[tooleman694]

I think it means a manual UW for the preapproval.

[Mike_B03]

I think the difference between "Automated UW" and "Manual UW" is what the computer spits out initially. If you get an approval from the computer underwriter, then the actual UW just needs to review the items that the computer said are required. If the computer says it needs a manual UW, then the actual UW needs to look over the loan app and make the decision of what they will need to see in order to qualify you.

[missfontella]

Do you have to close before June 1 or be approved before then to avoid paying MIP for the life of the loan?

[Autumnslight]

I believe you just need to have an FHA case number issued before the deadline. Case numbers are issued once you have a sales contract on a property and have made the actual loan application. I believe the case numbers are good for 6 months.

[Burned2manybridgesB4]

Check out the CNN Money page for a short version of what's coming. Just read it last night.