Dive Brief:
- Big banks may be in a mood to walk away from making loans through the Federal Housing Administration (FHA), a move that the National Association of Realtors would prevent qualified borrowers from becoming home owners because of down-payment requirements.
- The FHA requires 3.5% down, less than conventional lenders, and a whole group of buyers would be locked out of the market if the bankers drop out, NAR President Steve Brown said.
- With banks seeming to be less interested in lending, smaller lenders are gaining market share and eliminating some of the FHA option.
Dive Insight:
While some reports say builders are catering to higher-end customers rather than building for entry-level customers, they would still be hurt by a market in which FHA-enabled buyers left out.