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News Now

Washington
CUNA backs FHA risk management initiatives
WASHINGTON (8/19/10)--The Credit Union National Association (CUNA) this week said it supports the Federal Housing Administration’s (FHA) pending imposition of new down-payment requirements. The new down-payment requirements, which were proposed by the FHA last month, would remove potential borrowers with credit scores of 500 or less from consideration for FHA loans and would require borrowers with scores between 500 and 579 to make a minimum 10% down payment. The FHA currently requires borrowers with credit scores below 500 to make a minimum payment of 10% of the value of the home being purchased. In a comment letter sent this week, CUNA said that it would support stricter requirements if those requirements were imposed on a graduated basis. CUNA said that it also agrees with the FHA’s potential plan to exempt borrowers who refinance current loans from the credit score requirements, as long as it is restricted to an interest rate reduction refinance, as well as the FHA’s proposal to reduce the amount of the buyer’s closing costs that may be paid by the seller from 6% to 3% of the purchase price of the property. Jeff Bloch, CUNA senior assistant general counsel, said that CUNA's understanding is that these proposed changes will not affect credit union mortgage lending, as credit union underwriting standards generally meet or exceed these standards. "The goal of these changes appears to be to help ensure that the lax underwriting standards of others in the past do not reoccur," he added. For the full comment letter, use the resource link.


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