“All we think about is credit risk, but comparing it to subprime just doesn’t make any sense. Let’s be rational.”
– FHA Commissioner David Stevens, dismissing the notion that FHA-backed mortgages represent a new subprime crisis in the making, despite the worry that the agency is depleting its reserves.
The FHA is set to announce new requirements intended to shore up its reserves, including a reduction of the amount of money sellers can contribute to closing costs. Other changes could include increasing a buyer’s minimum down payment (currently 3.5 percent), increasing upfront and annual insurance fees, or establishing a minimum credit score for loan approval, according to the Wall Street Journal.
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