The Bridgewaters, Massachusetts

The current housing market turmoil has delivered the conventional home loan sector a hard uppercut on the chin, sending it reeling, which left a huge void in its wake. This gave FHA, rather dormant home loan insurer in recent years, an opening to regain some its past luster and it has steadily gained market share ever since. Its low down payment requirement and more lenient underwriting criteria have allowed many of today's mortgage borrowers achieve home ownership. Many well-meaning industry observers have also dubbed FHA the new subprime lender.

FHA has run into trouble of late, though, like who hasn't, due to growing defaults on mortgages it insures. That has prompted it to tighten the guidelines under which it operates. Now it is planning to make more adjustments in a further attempt to lower risk and shore up its leaky insurance fund.

The oven-fresh proposal calls for increased net worth requirement for approved mortgage lenders. The minimum would be $1 million in the first year and would go to $2.5 million by the third year. The current threshold is $250,000, so the hike would be substantial and would predictably lead to many of them giving up their status. It would then consolidate FHA-insured lending to a fewer home loan companies, on one hand, but they would also be stronger in dealing with adverse situations, on the other.

Another significant change under consideration is that third-party mortgage brokers would no longer need to have direct FHA approval. The FHA-approved home loan firms would be responsible and liable for the loan files they get from mortgage brokers. In essence, they would then be approved by these FHA-endorsed lenders, creating a similar arrangement that currently exists with Fannie Mae and Freddie Mac. That actually makes sense, streamlining the major government-affiliated mortgage programs.

Las Vegas valley - featuring Summerlin, Henderson, Mountains Edge, Anthem, Southern Highlands, Aliante and Rhodes Ranch - mortgage borrowers would probably end up having more FHA brokers to choose from, should these changes be enacted. As it seems, they would be relieved of the present net worth requirement and just get okayed by the various large FHA-approved mortgage lenders. More brokers would lead to more competition and the consumers ought to be clinking beer glasses over that possibility.