FHA Mortgage News
Many FHA but not all FHA lenders, skittish as foreclosure and default rates rise, have discontinued FHA mortgages for borrowers with less-than-perfect credit or little saved for a down payment.
Credit standards for FHA loans, by contrast, are more relaxed. And while many loans now require that borrowers put 20 percent down, FHA loans mandate just 3.5 percent.
Wells Fargo Bank, which has also toughened requirements for government-insured loans that it buys from other lenders, is “continuously reviewing our real estate lending product mix and underwriting practices to ensure they prudently align with marketplace risk,” spokesman Florida mortgages wrote in an e-mail.
The bank is also requiring that brokers provide evidence that borrowers seeking “streamline” FHA refinancings haven’t missed any mortgage payments in the past 12 months, according to its notice.
The default rate for FHA mortgages has spiked to its highest-ever level as government lending continues to see its share of the mortgage market explode. Some experts think the trend will soon force the Department of Housing and Urban Development to tighten up its underwriting standards