Proposed federal changes on seller concessions, credit score requirements and loan-to-value ratios represent “significant programmatic changes” and would impact future homeowners, according to the Mortgage Bankers Association (MBA). In a letter to the US Department of Housing and Urban Development (HUD), the MBA said its members urge the federal agency “to ensure policies do not reach too far and needlessly discourage home buying at a time when the housing market is still fragile.” Last month, HUD announced possible policy changes within the Federal Housing Administration (FHA) aimed at boosting capital reserves. The changes include reducing the limit on seller concessions to 3% from 6%; using a FICO credit score of 500 as a minimum for consideration in FHA programs; and lowering the maximum loan-to-value to 90% for all borrowers with credit scores less than 580. MBA said the new rules would also “tighten manual underwriting standards, including new requirements of at least one month reserves and stricter debt-to-income ratios.” The association said it supports the new rules regarding credit scores but feels the seller-concessions rate would be better at 4%, which is in line with that of the Department of Veterans Affairs Loan Guaranty Program, than the proposed 3%. “At a time when the housing market is slowly showing signs of recovery, MBA does not think that it is appropriate to make policy changes that could negatively impact the purchase market, especially the first-time homebuyer segment, which serves as a catalyst for the overall market,” the association said in its letter to FHA commissioner David Stevens. Write to Jason Philyaw.