FHA lending has been the savior of many local markets over the last 24 months. Low down payment requirements, lower credit score requirements and the allowance of non-occupying co-borrowers has made the FHA loan the go-to financing vehicle for a lot of transactions. With such a surge in business, the FHA has had to look at its financial capacity to insure those loans (FHA only INSURES loans, it does not MAKE loans). In doing so, some changes have already happened and more are sure to impact your clients.

1. The increase in FHA Up Front Mortgage Insurance Premium (effective April 1, 2010). This is a change that occurred earlier this year. UFMIP went up from 1.75% of the loan amount to 2.25% of the loan amount.
   Impact to consumers--Higher up front and/or monthly expense if fee is financed.
2. The increase of FHA Monthly Mortgage Insurance (not yet enacted). This is an idea that has not yet come to fruition. But, if it does, it will be an increased monthly expense to consumers.
   Impact to consumers--Buyers with tight debt ratios will qualify for lower loan amounts.
3. The decrease in maximum seller contribution from 6% to 3% of contract price (not yet enacted). This is an idea that will move into the public comment period sometime in the third quarter. If this does come to pass, it may negatively affect sales in some markets.
   Impact to consumers--Those who are reliant on seller contributions will no longer be in a position to purchase.

These are three simple things that you can be on the lookout for in the coming weeks and months. Knowing what's coming down the road will help you to avert challenges at contract, or worse, at the closing table.

Rich Hayden is the Chief Operating Officer and an active loan officer with HomeFirst Mortgage Corp in Alexandria, Virginia.