Since the mortgage crisis when loans became almost impossible to obtain, Vero Beach mortgage lenders have begun to loosen standards again. This begs to ask the question, will lenders ever learn their lesson from loose lending practices?
Recently, the Federal Housing Administration (FHA) announced changes they hope will encourage banks to give more home loans to worthy but weaker borrowers.
The government has extracted billions of dollars in penalties from lenders that made mistakes on loans to borrowers who later defaulted. The errors ranged from small mistakes to ones that affected the riskiness of the Vero Beach mortgage they chose to underwrite in the first place.
Some banks, believing the penalties are too harsh relative to the errors made, have pulled back from originating a Vero Beach mortgage backed by the FHA and argue that the broad "certification" they must make when originating a Vero Beach mortgage should be limited to significant errors.
Will FHA Changes Help Those Trying to Get a Vero Beach Mortgage?
The FHA’s attempt to change the provision shows the tightrope policy makers and regulators are trying to walk. While they want to hold lenders accountable for crisis-era mistakes and retain recourse should the Vero Beach mortgage go bad, they also want the banks to extend loans to some consumers who have been largely shut out of the Vero Beach mortgage market since the crisis.
Lenders typically have pulled back on FHA lending by having more stringent requirements than what the FHA would allow. For example, even though the FHA will guarantee loans to borrowers with credit scores of as little as 580, on a scale of 300 to 850, a bank might not give a Vero Beach mortgage to borrowers with a score below 640.
Meanwhile, Vero Beach mortgage rates remain near a two-year low, even though rates inched up slightly in the past few days. Freddie Mac says the average rate on a 30-year fixed rate mortgage is now around 3.69 percent, that's up just a fraction from 3.59 percent a week ago. A year ago, 30-year rates averaged 4.28 percent.
We'll continue to monitor the FHA decisions and how they may affect (negatively or positively) getting a Vero Beach mortgage as we continue moving through the housing recovery in 2015.
In the meantime, you can get more information about news that may affect the Vero Beach mortgage market in our section on Vero Beach Mortgage Info to your right under Vero Beach Real Estate Categories.
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