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FHA Low on Funds, Raising Mortgage Insurance Premiums



Low reserves inspire the Commissioner

moneyIn an effort to “strengthen the FHA’s capital reserves,” the Federal Housing Administration Commissioner David Stevens announced today big changes.

The FHA will raise the up-front Mortgage Insurance Premium from 1.75% to 2.25%, the second time in two years they have increased the rate, betting on this spike keeping FHA’s coffers stable.

“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens.

Other changes agents must know about FHA

Now, if borrowers want to qualify for the 3.5% down program, the new minimum FICO score is 580, and for those under 580, they’ll be required to put down at least 10 percent. The FHA will also reduce allowable seller concessions from 6% to 3%, forcing borrowers to have skin in the game.

As the FHA went from insuring 3% of loans to now 40%, they’ve been looked at more closely with raised eyebrows as defaults continue to skyrocketed and they are now below their required reserves.

Yesterday, the HUD and the Treasury vowed to do their part in stabilizing the real estate market, and today, the FHA makes their announcement, with all three experiencing 20/20 hindsight which some analysts say is too little too late. Either way, agents should know about these changes as they navigate the waters of the real estate market.

Lani is the Chief Operating Officer at The American Genius - she has co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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  1. stephanie crawford

    January 21, 2010 at 2:47 am

    The changes for credit-challenged borrowers are interesting. I mean, are there banks actually lending to people with 580 scores? Not around here. Even the brokers in my area are requiring a 620 minimum.

    • Benn Rosales

      January 21, 2010 at 11:13 am

      I cant imagine what a rate buy down would cost on a 580 right now, I was saying to Lani when writing this 620 is pretty much the true bottom. But knowing what FHA can actually do is wise especially if you’re working with first home buyers, at least then you can go to bat for a client, but they may not want that rate!

  2. Mack Perry

    January 21, 2010 at 8:38 am

    I thought it was also interesting that loan originators and underwriters where going to be held liable for their actions on the loans they originate and underwrite. Can you say a higher level of accountability?

  3. Portland Condo Auctions

    January 21, 2010 at 7:09 pm

    Larger down payment is good. I really feel that the down payment is a measure of how capable the buyer is as far as keeping the mortgage in good standing and the house afloat. I really feel that the low or no down payment programs just end up hurting everyone.


  4. Patrick Flynn

    January 22, 2010 at 10:34 am

    I was working with a buyer who had a 615 credit score and he was told to get lost! I’m inclined to go with Stephanie on the credit score issue…heck my lender is telling me 640 minimum!
    Sounds like FHA is trying to get into the ‘Conventional’ arena.

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Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?



Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.



aging housing inventory

aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.



zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub,, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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