August 2010

FHA Tightens Mortgage Requirements

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The FHA has tightened lending standards, all in an effort to remain solvent.

Higher monthly fees. Earlier this month, Congress gave the green light for the FHA to raise the monthly premium it charges on loans; a presidential signature is expected.

FHA-backed loans have looser restrictions than other mortgages on down payments -- now at 3.5% of the home's selling price -- but require borrowers to pay an upfront fee and a monthly fee. The legislation allows the FHA to hike the monthly fee to as much as an annualized 1.5% of the loan balance, up from 0.55%, though initially it will go only to 0.9%.

The initial fee was increased earlier this year to 2.25% from 1.75%, though the FHA has said it will bring it down to 1% with the higher monthly fee.

A fee that doesn't go into paying off the loan? That would surely help. (sic)

Credit scores are now raised to 580 minimum for a 3.5% down payment.

Sellers can only contribute 3% instead of the 6% for borrower costs to sell the house. That puts the borrowers costs to 6.5% of the purchase price on a new home.

The FHA is also tightening underwriting standards.

The changes are a result of legislation passed earlier this month.

So much for the ownership society, but that was a fiction anyway, it was the debt with reduced income society in reality.

Must Read Posts for August 14, 2010

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On The Economic Populist you might have noticed the right column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.

Sometimes though, one cannot say it better but miss those who did.

Must Read Post #1

Another scary chart, proving corporations are simply creating jobs....abroad, this time from The Economist. The last two recessions are worst than the Great Depression in terms of job growth.

 

The more things change, the more they stay the same

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Perhaps the worst insult you can hurl at a politician these days is to give him the middle name of "Hoover".
Such as George Hoover Bush and Barack Hoover Obama. 80 years later Herbert Hoover is still the standard for the "do-nothing" president in the face of economic collapse.

Like most easy comparisons, these examples lack details. That's because the names are there for the purpose of accusation, rather than enlightenment.
However, if you dig down into the individual economic policies of Hoover, Bush, and Obama, the story gets much more interesting.

As Mark Twain once said, "History doesn't repeat itself, but it does rhyme." I'm not going to try and find direct connections in this essay, just broad picture comparisons. If the reader confuses the two, then that will only mean I was justified in writing this.

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