|
FHA seller concessions are under attack again.
Published in an email to me today, the FHA desires to reduce seller concessions from 6% to "one more in line with industry norms". Below is pasted directly from Friday's press release.
"In a separate Federal Register notice to be published soon, the FHA will propose to reduce the maximum allowable seller concession from its current level to one more in line with industry norms. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. The revised proposal reflects public comments received on an earlier proposal published in a Federal Register notice on July, 15, 2010. The revised proposal calls for a 30 day comment period. Following an analysis of the public comments received, a final rule will be issued."
The FHA is poised to open a comment period to gather feedback on this proposal. It is IMPERATIVE that every member of the real estate community and anyone concerned about homeownership comment on this proposal. The detrimental impact to the first time buyer market will be severe if the 6% limit is reduced. There are occasions where a buyer seeking a smaller loan amount or a renovation loan needs the full 6% maximum in seller concessions to make their loan work.
The FHA already requires that the buyer put 3.5% into the transaction in the form of a down payment. If another 3% is required from the buyer to close the loan, many deserving and otherwise well qualified buyers will be completely unable to purchase.
I am completely against the proposal to reduce seller concessions on FHA loans. Appraisal guidelines already require that seller concessions be deducted from the sales price when adjusting comparable sales. Adding this rule will absolutely not "inflate (the) appraised value" of a given property if appraisal rules are followed and enforced.
Please look for another post when the FHA comment period opens, and please forward to all of those in the real estate community and beyond to ensure that another poor reasoning is not implemented.
|
