The Federal Housing Administration recently announced an alteration in the way that loan defects will be classified by the government. The overall goal of making these changes is to more accurately assess the severity of errors in the underwriting process. Right now, the federal agency uses 99 separate codes to categorize underwriting mistakes, but the goal is to consolidate these…
FHA
An FHA loan is insured by the Federal housing administration for the purposes of a mortgage. These loans originated after the Great Depression, when defaults and foreclosures were commonplace in the housing market. Today, the U.S. government insures the loans for lenders approved by the FHA for the purposes of reducing risk if a borrower were to default on the…
FHA loans provide an important service for many low-income or higher-risk buyers to purchase a home. Many people get confused by thinking that the FHA provides the loans themselves, but this is not the case. Borrowers still must obtain the loan from a lender, but the FHA provides the mortgage insurance (or the protection against default) on that loan. Having…