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New FHA rules

Regular Contributor

New FHA rules

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

Starting Score: TU 660 EQ 623 EX 644
Current Score: TU 670 EQ 683 EX ???
Goal Score: 700 on all 3

Freedom: $3k, CSP: $5k, Chase Disney Premier: $5k, AmEx Zync: NPSL, Cap1 NH: $750, Cap1 Plat: $750, USC CU: $500
Message 1 of 27
Valued Contributor

Re: New FHA rules

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. Smiley Happy
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 2 of 27
Established Contributor

Re: New FHA rules

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

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Starting Score: 492-TU04, 480-EX FICO V2, 467-EQ Beacon 5 (Via Mortgage PreQual March '12)
Current Score: EX,EQ,TU (lender pull): 652, 659, 689, Walmart TU FICO: 691 (05/13)
Goal Score: 700

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Message 3 of 27
Valued Contributor

Re: New FHA rules

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

Good Luck
May all your dreams and wishes become a reality!
Message 4 of 27
Super Contributor

Re: New FHA rules

Was discussed in-depth previously at FHA updating policies


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

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial Multifamily) since 2002
In Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage
Message 5 of 27
Valued Contributor

Re: New FHA rules

I think it means a manual UW for the preapproval.
Message 6 of 27
Valued Contributor

Re: New FHA rules

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.

Message 7 of 27
Valued Member

Re: New FHA rules

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

Starting Scores: TU - 577, EQ - 636, pulled on 01/10/12
Current Scores: TU - 679 (02/21/13) EQ - 663 (02/23/13)
Goal Score: Mid-score of 680 by June 2013
Message 8 of 27
Frequent Contributor

Re: New FHA rules

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.

07/29/12: EX FICO (Amex) 684 | EQ MyFICO 631 | TU Walmart 695
Current: EX FICO (MyFICO) 733 | EQ (MyFICO) 683 | TU (Walmart) 745

First Goal: 700+ across the board - Got it on EX & TU!!!
Message 9 of 27
Valued Contributor

Re: New FHA rules

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

Message 10 of 27