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Fed Lending Reforms due Soon

July 9th, 2012 Comments off

azstarnet reports the two major mortgage market overseers in the federal government are trying to convince private lenders to ease up on lending restrictions that have become tighter than those required by Fannie Mae and Freddie Mac, which are under the jurisdiction of the Federal Housing Finance Agency, and the Federal Housing Administration (FHA), which administers low-cost loans. Saying a minor infraction in documentation can conceivably cost hundreds of thousands of dollars, lenders have adopted “overlay” rules adding extra fees, larger down payments , and requiring higher credit scores than the GSEs require. In addition, loan originators are unsure of the effect of upcoming Dodd-Frank regulations, and do not want to be charged with underwriting deficiencies after 2-3 years of a loan that has been on time. MHProNews.com has learned FHFA and FHA are expected to announce reforms soon.

(Image credit: Federal Housing Administration)