“Certainly the government continues to be involved in the (FHA) program. The Senate recently voted 66-31 to adopt an amendment that would include energy costs in FHA’s mortgage underwriting process. The amendment, offered by Georgia Republican Sen. Johnny Isakson, would reduce the amount of energy used in homes and help create energy efficiency retrofit and construction jobs. “The mortgage underwriting process, as we all know here, is about evaluating a borrower’s ability to afford a mortgage, and history tells us that if we play around with it, it does not end well when we forget this,” Sen. Richard Shelby (R-Ala.) said on the Senate floor in opposition of the amendment. “This amendment would weaken FHA’s underwriting standards, leading to greater safety and perhaps soundness concerns for the FHA portfolio, which received a $1.7 billion bailout in 2013…

…It would require that appraisals be inflated to account for the value of energy efficiency upgrades as determined by HUD.” FHA also published Mortgagee Letter 2016-08, Student Loans, which provides revised guidance for mortgagees when calculating student loan obligations for use in a borrower’s debt-to-income ratio calculation. FHA believes that its approach provides the appropriate balance between expanding access to credit and ensuring that the borrower is able to maintain successful, long-term homeownership…Plenty of borrowers rely on the FHA’s slate of programs for financing. In recent years, given the FHA’s capital issues and the continued penalties and settlements that lenders are experiencing, we can’t ignore the question of the viability of the FHA program going forward. And the impact of FHA, HUD, and DOJ news on Ginnie Mae and its ability to do its job in the face of budget constraints.”, Excerpt from April 2016 Mortgage Industry Newsletter

Posted on May 10, 2016, in Postings. Bookmark the permalink. Leave a comment.

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