In today’s Federal Register (75 FR 41217) HUD published notice that in order to enhance FHA risk management practices, FHA is proposing the following changes to its underwriting guidelines: 1. reduce “seller concessions”; 2. introduce a minimum eligibility credit score; 3. reduce the maximum LTV for low credit score borrowers; and 4. tighten underwriting standards for manually underwritten loans. HUD states in the notice that the Mutual Mortgage Insurance Fund (MMIF) capital ratio has fallen below its statutorily mandated threshold and the purpose for these proposed changes is to maintain the financial soundness of the MMIF. HUD is soliciting public comment on these proposed changes. Comments are due by August 16, 2010 and the instructions for submitting comments by the due date are set out on page 41217 of the above-cited issue of the Federal Register.
