Big News regarding FHA Loans.

This week we got something that feels new to the real estate world – a hardline in the sand, a concrete, measurable, impactful change. Not speculation regarding new proposals or market reactions to flawed data. On Wednesday it was announced that FHA loans will no longer be offered to non-permanent resident aliens.

Executive Orders

As you may know, Trump has taken a hardline with immigrants – both legal and illegal – since taking office. U.S. Immigration and Customs Enforcement (ICE) has deported about 693 individuals per day since January 26th. (Interestingly when comparing February of this year with February of last year, Biden deported more people while in office over the same month.)  According to Marco Rubio, the State Department has revoked 300 student visas. There are reported stories of citizens who have been detained as well for “fitting the description of an illegal immigrant.” While the number of these cases is extremely limited, their stories are going viral. In alignment with these policies, as of May 25 – non-permanent resident aliens will no longer be able to obtain an FHA loan to purchase a home.

What this means plus what it doesn’t.

This will impact legal visa holders, depending on what type of visa they have. While it will serve the current administration’s aim of limiting federal resources offered to illegal immigrants, it will also eliminate of immigrants here on work visa’s from obtaining an FHA loan to purchase a home. Non-permanent resident aliens will still be able to obtain conventional mortgages backed by Fannie Mae and Freddie Mac.

You have until May 25…

If you are currently shopping for a home with FHA preapproval, you will need to have your FHA case number pulled by May 25th. An FHA case number requires an address, meaning you would have to identify the property you are purchasing. Be sure to check with your lender for alternative loan programs as well, to see if you may qualify to continue shopping and eventually close on a home even after May with your current immigration status.

No one is being evicted.

Non-permanent resident aliens who currently have FHA loans will not have these mortgages called due. In one of two letters issued by FHA on Wednesday, the guidance details that “FHA does not collect citizenship or residency data from the loan application and therefore does not maintain information on the number of non-permanent residents who have received FHA-insured loans under past policies.”

Interest Rates

In other news, PCE numbers came in this morning showing personal spending rose by .4 percent. Mortgage bonds are reacting really well to this data because the market was expecting .5% percent. The S&P reacted less well, with the Dow dropping seven hundred points following the news. Since its record high in December, the Dow has now fallen by a total of 3,500 points. While I was trying to find information about how this has affected the average American, I found an ironic headline from Forbes stating American Billionaires have lost $415 billion in wealth since Trump took office.

Of course, you are following this blog for real estate news and strategies so let’s focus on the impact on interest rates. We are in an interesting spot. Inflation numbers overall are trending in the dead wrong direction. While the year over year numbers came in lower than expected, it was still an increase. More importantly though, the 6-month run rate on inflation is currently at 3% and the 3 month rate is up to 3.5%. Inflation is the enemy for more interest rates, so we should be seeing them go right up...

Except the economy is struggling.

And that is why we are seeing mortgage rates improve in the face of increasing inflation concerns.

Save the Dates

If you are a local realtor to the Reno area, be sure to check out the free class we are doing at Address Income next week. It’s called Realty Rewired and we’ll teach you how you can combine power data and market analysis with owning your authority to improve your conversion of buyer and seller leads. 

If you are a human being, you should register for the negotiation class Cortney Young is teaching within the shivpeter inner circle on April 9. It is free, virtual, and open to everyone. Oh and we are back with our critically acclaimed podcast – Property Pursuits – next week!