In today’s environment of help the customer and regulate the lender even more, HUD has decided to remove the 1% cap on FHA mortgages. Although state and federal guidelines will prevent usurious charges by any broker or lender, the rule change is designed to help FHA lenders to stay in compliance with the new RESPA rules starting this year. There is a chance that this will increase the cost of borrowing to borrowers in lower value states. If HUD puts a percentage limit on costs then we should see no discernible increase in overall borrower costs and this may even allow some lenders to lower their minimum loan amount thus making credit available for more lower income borrowers. We’ll see. One thing is for sure, lenders, technology vendors and the like will no doubt experience pain putting these new rules in place. The sad reality is if they just enforced the existing rules, these changes would not be necessary. Get ready for even more regulation and licensing hurdles in 2010.
Happy New Year All!
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