It took several years, but FHA Modernization has finally passed. Along with a host of other stuff that will take several weeks to sort out and then some. Some good things and some bad things of course. Most of the types of loans that Congress was gunning for are already extinct. So, I will focus on some of the good things that have come about.
HECMs [FHA's reverse mortgage] have a new nationwide limit and a lower origination fee with a cap. This will give more seniors an opportunity to use this program and will lower the costs. $417,000 is the new limit with a higher amount in high cost areas and $6000 will be the origination fee cap. Purchases can now be done using this program as well. The sale of annuities in conjunction with a reverse mortgage will be prohibited.
It appears a higher down payment of 3.5% will be part of the new FHA. A few years ago it looked like the opposite was going to happen. But the lawsuits to continue Down Payment Assistance Programs got in the way. Now both DPAs and a lower down payment for FHA are non-starters. GIfts from other sources are still allowed though. Family, employers, and municipalities will lead the way. DPAs will probably fight again, but this time they are done.
Higher county loan limits--a battle lost in the mid-1990s to PMI lobbyists--are now a permanent fixture. Many borrowers ended up in non-FHA programs due to the unrealistically low county limits before this change. This should help for a number of years to come. It should not have taken this long for FHA Modernization. But you know the old saying about the speed of legislation applying to everyday life...It would take an Act of Congresss...