Comment Submitted by Christian Hyde, Intermountain Healthcare

Dear HUD and FHA, Regarding the changes to FHA underwriting standards, the proposed changes are not restrictive enough and will continue to expose the FHA to high financial losses. It is my concern as a taxpayer that a future federal bailout, similar to Freddie Mac and Fannie Mae, is almost inevitable for the FHA unless loan standards are improved even more significantly. There are many deserving members of this country who need help achieving homeownership, but the policy of easy credit with only 3.5% downpayment exposes the FHA to unnecessary risk of default. If the housing market drops by only 4%, which is quite likely given persistent high unemployment next year, these borrowers are then in negative equity which is a known risk for strategic default. A double dip in the housing market will expose the FHA to a tidal wave of defaults in the next few years. In my opinion, requring a 10% minimum downpayment for all but the most credit-worthy borrowers (FICO over 750) is the safest way to ensure the FHA remains solvent in the next five years. This will allow more cushion when the housing market dips again. Similarly, allowing sellers to pay 6% of the buyer's closing costs has resulted in many people buying with essentially no money down. While this may help get people into homes, it does not help them stay in that home long term, as they have no personal financial stake in that home. Without skin in the game, there is no incentive to continue paying the mortgage during times of financial stress. 3% seller concessions may be the industry standard, but for the sake of FHA solvency, a safer number would be 0% seller concessions. If a buyer cannot cover the downpayment and costs of closing from their own personal savings, then they are not ready for the financial risks and responsibilities of homeownership. Thank you for your consideration.