PARAMOUNT MORTGAGE - LENDER'S BLOG

“There's some good news brewing at the U.S. Housing and Urban Development Department (HUD) that could save thousands of home sales in the months ahead,” writes Ken Harney, Real Estate Columnist for Inman News and book author.

“It's all about seller concessions,” continues Harney. “Last year the Federal Housing Administration (FHA) announced that it intends to slash maximum seller contributions from 6 percent to 3 percent” across-the-board for FHA-insured mortgages.

After hearing complaints from builders, Realtors and lenders, HUD is now planning to adopt a more nuanced approach.

Harney says, “The good news is that the widely feared, draconian 3 percent limit appears to be off the table. Something more flexible is coming.”

The new policy is expected to permit higher seller contributions – probably between 4 and 5 percent – on smaller loan balances. Meanwhile, the 3 percent cap would be mandatory on all loan amounts above some yet-to-be-specified limit.

Behind doors policy discussions have indicated a dollar ceiling on all seller concessions might be an alternative option, such as a maximum of $6,000. On smaller mortgages, the dollar total permitted might even hit the equivalent of 6 percent.

“The final details aren't fully nailed down and a formal announcement is not expected until sometime in April with the policy changes taking affect in summer,” offers Harney. However, “a broad outline is in place and unlikely to change.”

Whatever the final version turns out to be, the net result should be much better for home sellers, buyers and real estate professionals than last year's threatened 3 percent cap for everybody.

This would especially be true in hundreds of local real estate markets where FHA is the main support for first-time and moderate-income home purchasers.