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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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