FHA plans to impose significant restrictions on what sellers can contribute at settlements soon. FHA will also raise its mortgage insurance premiums.
In my opinion, this is fantastic news. Sellers shouldn’t be paying $5,000 to $10,000 in buyer’s closing cost, period! Doing so only helps the buyer attain upside down status faster! This is the reason FHA Reserve funds are so low, because those with less skin in the game, those near zero down buyers, walked away from their mortgages. In the end, Sellers paying buyer’s closing cost is a bad idea and it’s the US Taxpayers that get left holding the bag when FHA has insured all of these mortgages. Bill Cobb, Appraiser