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Federal Housing Administration will be tightening underwriting process!


The Federal Housing Administration has announced tighter lending standards and loans will go now through a rigorous manual underwriting process. In 2016, the FHA loosened up its underwriting standards and there are now concerns that they've gone too far.

About 40,000 to 50,000 loans a year will likely be affected by the tighter underwriting standards,according to The Wall Street Journal.

In the previous fiscal year, the average credit score for borrowers of FHA-insured mortgages dropped to 670, the lowest in a decade. Nearly a quarter of FHA-insured mortgages were issued to borrowers with a debt-to-income ratio higher than 50 percent.

Source: “FHA Clamps Down on Risky Government-Backed Mortgages,” The Wall Street Journal (March 25, 2019) [Log-in required.] and “FHA Says as Many as 50,000 Mortgages Will Be Affected by New Lending Rules,” HousingWire (March 25, 2019)

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Debora Sanders is a real estate salesperson licensed by the state of California affiliated with Sotheby's International Realty. Sotheby's International Realty is a real estate broker licensed by the state of California and abides by equal housing opportunity laws. All material presented herein is intended for informational purposes only. Information is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description. All measurements and square footages are approximate. This is not intended to solicit property already listed. Nothing herein shall be construed as legal, accounting, or other professional advice outside the realm of real estate brokerage.

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