Real estate investing in the residential market has been counting on many buyers getting financing from the Federal Housing Administration also known as FHA. It is the best and only program available for first home buyers that have some credit and little money to bring as a down payment for the house. I have personally sold most of the houses I have rehabbed to FHA buyers.
FHA can now stop a lender if there are signs of fraud.
Few days ago the House Financial Service Committee has approved legislation so to enable FHA to continue in providing loans even after the financial reserves that the federal agency has to maintain by law have fallen below the minimum level (2%) due to the high number of defaults on loans insured by FHA.
In a nutshell: the FHA will charge more fees that will be distributed during the life of the loan, it will be able to punish lenders that are guilty of fraud, will maintain the current low down payment (3.5%). You can read a more detailed article here by Bryan Hellis.
This new legislation shows a definite effort on the part of the current government to give people a house they can own, with a very little down payment and with a distribution in time of the initial costs that won’t have to be paid all upfront. The good news is that the bread and butter residential housing market is going to stay, the bad news is that we still don’t know how effective the new legislation will be at preventing foreclosures.
Roberto Mazzoni
P.S. Remember that a new Meetup has started in Tampa Bay and will provide the only free available information on commercial foreclosures in the area. Join now!
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