Thoughts on FHA Mortgagee Letter 2012-10?

Asked by Darrell D. Drouillard, Schertz, TX Tue Jun 19, 2012

What are your thoughts on the FHA rescinding Mortgagee Letter 2012-03 Guidlines regarding credit dispute issues and collection issues?

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Tommy Burris, Mortgage Broker Or Lender, Baton Rouge, LA
Tue Jun 19, 2012
It is going to help a lot more people get a home loan.
A hard and fast rule (like the proposed rule) doesn't take into consideration the whole story.
I don't think it was well thought out.
But I DO think it was a little attempt for HUD to push more people to Conv financing

Tom Burris
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Jason Campbe…, Agent, San Antonio, TX
Tue Jun 19, 2012
Just for those who read this question and wanted this translated into English.. you need to review the Mortgage Letter 2012-03 -

Basically in a nutshell... they are recending the requirement to pay off all the collections that add up to $1000 or more...

Court ordered judments will still need to be paid off in order to qualify for FHA Insurance...

But if you boil this down to 3rd grade English... this will open up a lot more opportunity for buyers who do not have a lot of cash to spend on credit collections to qualify for homes.

On one hand... one could argue - "Hey man... that opens up the chance for a lot more garbage loans to be closed and widen the foreclosure gap even more"

The flip side to the coin is - "Just because folks have a few collections, does not mean they won't pay for the roof over their heads"

My take... If we get more buyers out in the market right now and make them homeowners... This is going to help property values... It's basic economics... There is more demand, and therefore, the supply becomes more expensive... Having a solid housing market is a good thing for every part of the economy...

Bad news for buyers is... if you don't get off your butt and grab a home now while the rates and prices are still low... you will be kicking the hell out of yourself.

Good news is.. for those who need to sell their homes to upgrade to a better one... The FHA market will have a lot more players in it... so if you are selling a home at $300K or less... here comes the wave... you can sell yours and upgrade to a luxury home now with a lot more ease..

There are pros and cons all over the place... but more homeowners means more property taxes which keeps the machine running...

The increase in buyers may lead to higher interest rates, which will suck... but they will stay low for a while...

Bottom line is... buyers need to stop thinking about it, and get their butts out there an look at homes... and they better get on it soon... inflataion is still the trend, and moves like this from FHA will change the face of the market... there may even be bolder moves coming... but things cant stay this good for buyers for much longer...

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