In a flurry of Mortgagee Letters issued in the past couple of weeks, HUD has changed the landscape of FHA loans--both forward and reverse. How those changes will be interpreted is anybody's guess. Some have already been implemented. Some have a start date of January. The elimination of brokers needing to get FHA approved by HUD is juxtaposed against lenders being responsible for all in the origination channel. Will lenders who wholesale to brokers eliminate that channel altogether? Will those who wholesale exclusively change their business model? [Wholesalers generally have no contact with the consumer.] Will this mean the end of brokers being able to do FHA loans? Will this mean fewer consumer choices?
Well, certainly if wholesalers are concerned about the lack of control over brokers, they may turn to retail and they may sign up brokers as employees to do what they have always done--work directly with the consumer. But, the broker, or former broker, will now only have one lender to choose from. The Account Executives or AEs as they are commonly referred as will need to adapt to become loan officers if there are no brokers to interact with in the future. [Bear in mind that this is merely speculation on my part, but my nearly 30 years in the business have given me a lot of insight.] Brokers without the FHA product will be severely hampered.
The FHA streamline now has more defined terms with respect to payment histories, benefits to the borrower, etc. Many consumers were streamlined even if there was little benefit to doing so. It is not all about the rate. If it takes 5 or 6 years to re-capture closing costs in terms of payment savings, the consumer may very well have been better off not refinancing. Mortgagee Letter 09-32 outlines many of these and other changes in the program. Slowing the default rate is the impetus behind these changes.
If you have a pre-approval that is more than a few weeks old, things may have changed for you, too. Especially if your credit scores hovered around 620. Many lenders are moving those minimums to 640 or higher. And that can mean your approval is no longer an approval. So, it is important to continue to do things to improve your scores. Making payments on time, reducing revolving balances to aggregate of less than 50%, and even watching to make sure credit card companies have not increased your minimum payments. Be diligent and pro-active and be in constant contact with your mortgage professional.