2010 FHA Mortgage Loan Updates

Updates to FHA mortgage loans have been announced for 2010 and more significant changes may be coming. Effective February 15th, mortgage lenders and other interested parties will no longer be able to order your appraisal directly. Essentially, lenders will have to order appraisals through “appraisal management companies”, impartial third-parties who will manage the appraisal process. These entities are already required on most conventional loans today. While it sounds good, the result will likely be a slowdown in the loan approval process as it has for conventional loans. We may also see more cases of low appraisals as some appraisers unfamiliar with the areas they are working, err on the low side. This process has been under fire in the conventional loan market for almost a year and may be amended as the year goes on.

FHA loan limits remain unchanged for 2010 with the single family loan limit in Texas remaining at $271,050, $347,000 for two-family, $419,325 for three-family, and $521,250 for four-family homes.

There are also some proposed changes that FHA has offered up that would affect which lenders could offer FHA mortgage loans. Some lenders, previously approved directly through the U.S. Department of Housing and Urban Development, FHA’s parent agency, would have to be approved through larger lenders who directly underwrite these loans. There is a potential here for more control of FHA lending by the nation’s largest lenders. This proposal is still in it’s comment period so no final decisison has been made.

There are also some more significant changes that could affect the availabiliy of FHA loans to consumers which we will comment on in our next post.