DS News


DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

Issue link: http://digital.dsnews.com/i/1494597

Contents of this Issue


Page 70 of 83

69 69 69 INVESTMENT GOVERNMENT PROPERTY PRESERVATION Journal Follow Us At: @DSNewsDaily FHA SEEKING INPUT ON FINANCING FOR REHAB HOMES e Federal Housing Administration (FHA) has published a Request for Information in the Federal Register seeking public comments on ways it can enhance its Single Family 203(k) Rehabilitation Mortgage Insurance Program. e 203(k) program enables those pur- chasing or refinancing a home to obtain FHA insurance on a mortgage that will cover the current value of the home plus rehabilitation costs. Consistent with the Biden-Harris admin- istration's goals to increase the supply of quality affordable housing, FHA aims to update the program so that it can more effectively serve as a tool to restore single family homes in need of renovation to productive use. e FHA's Section 203(k) insures mort- gages covering the purchase or refinancing and rehabilitation of a home that is at least a year old. A portion of the loan proceeds is used to pay the seller, or, if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilita- tion is completed. e cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area. e value of the property is determined by either (1) the value of the property before rehabilitation plus the cost of rehabilitation, or (2) 110% of the appraised value of the property after rehabilitation, whichever is less. "FHA would like to offer improved options to finance the purchase or refinance of a home that needs significant rehabilitation," Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said. "Feedback from today's RFI will help us advance our goals to increase housing supply, reduce vacancy and blight, and expand homeownership opportuni- ties in all communities." e FHA's 203(k) program currently offers two options: • e Standard 203(k) Mortgage, used for remodeling and major repairs, has a mini- mum repair cost of $5,000, and requires the use of a 203(k) Consultant. • e Limited 203(k) Mortgage, used for minor remodeling and nonstructural repairs, has a maximum repair cost of $35,000 and does not require the use of a 203(k) Consultant. FHA encourages all interested parties to submit comments by the April 17, 2023, deadline. by credit card debt. is is 10 percentage points higher than the last time we asked the question in Q2 2020 (25%), at the beginning of the pandemic. • Roughly one-in-five consumers (22%) said their debt is higher now than it was a year ago—which was significantly higher than when we last asked this question in 2013 (13%). e increase was most apparent among renters aged 18-34, as well as among Black and Hispanic respondents. • Among consumers who said their debt was significantly higher compared to a year ago, 39% attributed it to higher credit card debt, roughly twice as high as medical/health loans (21%) and auto loans (17%). Nearly 50% of consumers aged 35-44 and more than half of consumers in households earn- ing between 80% to 120% of area median income reported significantly higher credit card debt. What It Means for Housing • As debt stress mounts for renters, their ability to save for a down payment on a home will be further challenged. is may continue to limit first-time homebuy- ers and drive a continued demographic shift in homebuying, which now favors even more heavily wealthier consumers. According to an annual survey by the National Association of Realtors (NAR), first-time homebuyers comprised only 26% of home purchases in 2022. is metric is down from 34% compared to 2021 and is now at its lowest level since NAR began collecting data (historically, first-time homebuyers have made up approximately 40% of purchases). • A growing share of mortgage borrowers report being stressed in their ability to make debt payments as well as an inability to save money. is points to a risk that a growing share of current borrowers may be vulnerable to becoming delinquent on their mortgage payments if they were to experience a job or other income loss. • For the broader economy, consumers may soon cut back their spending to a greater de- gree, adding to risk of a recession occurring over the next year. If this were to occur, it would likely reduce demand for housing and provide less support for home sales, home prices, and mortgage originations.

Articles in this issue

Archives of this issue

view archives of DS News - DSN_March2023