FHA has a federally mandated reserve requirement of 2%. The audit today (11/12/09) came out at having only 0.53% in reserves. It was expected to be less than 2% but not this low. This means we should be strapped in for a bit of turbulence with FHA. Unlike conventional loans which normally have “regional” guidelines, FHA is FHA regardless of the area of the country. Expect to see some possible further tightening of credit guidelines and maybe even higher down payment requirements. The main cause of low reserves…housing values continue to decline (nationally), job loss and rising defaults.
Now for the good news. The rates are still amazingly low, coupled with the extension of tax credits, what a great time to buy. Let us know when you are ready! www.BuyorSellHomesinVA.com