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Not long ago, FHA lending was just another government-sponsored program
unworthy of political attention or media limelight. Now, with no less than three new reform initiatives, FHA is generating
excitement, confusion, speculation, and even venom for political pundits and the media.
Fixing Broken ARMs
FHASecure is a new federally-insured (temporary) lending program announced by
President Bush on August 31, 2007, and released to FHA-approved lenders on September 4. Qualified homeowners seeking
payment relief from their adjustable rate mortgage (ARM) may be able to use FHASecure to restructure their loan into a
more stable, fixed-rate program, even if they are already delinquent on payments. "Risk Based" fee schedules, which are to
be released shortly, will help price these loans appropriately.
Do You Qualify?
To qualify for an FHASecure loan, borrowers must meet the following five criteria:
- A history of on-time mortgage payments before the borrower's teaser rate expired and loan reset;
- 3% equity in the home; or cash to compensate (see your mortgage professional to find out about other methods of
meeting this requirement);
- A sustained history of employment;
- Sufficient income to make the mortgage payment; and
- The loan application must be signed no later than December 31, 2008.
Even if you do not meet these criteria, you should still contact a qualified mortgage professional because he or she can
often provide you with other resources to help overcome your current challenges and reach your financial goals.
The House Takes Initiative
Last month, the House overwhelmingly passed FHA reform bill HR 1852 (The Expanding American Homeownership Act of 2007).
The next step is the Senate where a vote is expected within the next few months.
As the bill stands now, there are a number of significant changes that could dramatically impact home lending, including
making FHA loan limits as high as $729,750 in high-cost areas, such as California and Florida. It's uncertain if the Bush
administration will support the bill in its current form, but it has several features that could easily reshape FHA
lending as we know it.
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Lower Down Payments: Authorizes zero and lower down-payment loans for borrowers who can afford
mortgage payments but lack the cash for a required down payment. (In fact, options are now available which may help to
expand or stabilize certain programs for those who have little to no cash.)
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Subprime Borrowers: Directs FHA to provide mortgage loans to higher risk (but qualified) borrowers
without authorizing unnecessary fee hikes on such borrowers.
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Reverse Mortgages: Enhances the FHA reverse mortgage loan program to help seniors pay for health and
other expenses by removing the loan cap to avoid program shutdowns, raising loan limits, and reducing the maximum fee
lenders can charge for these loans.
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Multifamily Loans: Raises FHA multifamily loan limits so these loans can fully fund construction
costs in high-cost areas, and enhances sale of foreclosed FHA rental housing loans to localities so that affordable
housing can be maintained in local communities.
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Higher Loan Limits: Raises the FHA loan limit in each area to the lower of (a) 125% of the local area
median home price or (b) 175% of the national conforming loan limit.
Senate's Blueprint for Reform
Read twice and approved by a Senate banking panel on September 19, this is the Senate's version of FHA reform. Again,
further steps are necessary before this initiative is to become law. Following are some issues that the legislation is
attempting to address:
- Increase loan limits across the board;
- Reduce down payment requirements;
- Simplify FHA requirements for condominiums and housing co-ops;
- Expand reverse mortgage programs;
- Enhance home buyer counseling before and after purchase;
- Establish alternative credit scoring pilot program;
- Enhance fraud protection;
Bottom line
By updating and expanding FHA, lawmakers are clearly invested in removing some of the current limitations in FHA lending.
All politics aside, this new flexibility will likely help many homeowners.
5:03 PM - Oct. 29, 2007 - {9} -
RE: What's up with the new FHA loans?
FHA loans have been around for a while now. The problem is that the lenders need to get approved by HUD to originate them. Since it takes a while...and with a lot of loops they need to jump...they decided to originate '2/28' ARMs.
Instead of getting a rate for 7% or less on a 30yr fixed on FHA..they get a 8-9% interest rate that will adjust to 10-11% in 2yrs!
fha loans
fha loans - 11:09 AM - Oct. 31, 2007
RE: What's up with the new FHA loans?
the new fha program will be a good program when it comes out. zero down FHA is the best!
new fha loans - 8:26 PM - Nov. 7, 2007
RE: What's up with the new FHA loans?
Yes, we're all looking forward to the new FHA program. We think it will help lots of folks get into housing who otherwise couldn't and may help some of those who are in trouble now get out.
Andi Durbin - 1:49 PM - Nov. 8, 2007
RE: What's up with the new FHA loans?
Raising the FHA loan limits may turn out to be a lifesaver for many troubled borrowers. FHA foreclosure rates have actually gone down while foreclosure rates for other loans have gone up!
However, the bill seems to be languishing in the Senate and everyone needs to call their Senator to help push it through.
FHA Loan Limits - 8:55 PM - Nov. 8, 2007
RE: What's up with the new FHA loans?
Re: FHA Modernization Bill
I am a Mortgage Broker, 30 years in the business, I have never been a sub-prime lender. My office has stacks of loan files that we have no loan programs or lenders available for.
These loans are not real estate speculators or flippers, but they are the average American home-owners wanting to keep their American dream!
Approximately 500,000 home loans will re-set in the 1st quarter of next year. If these homeowners must default that would be approximately 750,000 American children that will no longer be able to go to their same schools, play with their neighborhood friends or attend their same Church or Synagogue.
These families will be financially ruined. You cannot even rent a home without a good credit history. I strongly urge you to contact members of the Committee on Banking, Housing, and Urban Affairs who currently have the bill for review.
This is not about Mortgage Broker’s staying in business or how much money they make. This is about the American Homeowner.
“A Mortgage Broker in the Trenches, asking for the tools to help people”
Don Marginson - 10:57 AM - Nov. 9, 2007
RE: What's up with the new FHA loans?
We also look forward to passage of the new FHA loan limit bill - known as Building American Home Ownership Act of 2007 . Please contact your Senators or Representatives to urge them to act on this legislation in this session. If you need to know how to contact them, you can go here and enter your address and then click on their email link.
Andi
Andi Durbin - 11:14 AM - Nov. 9, 2007
RE: What's up with the new FHA loans?
all this that i'm reading it refers to the new law that president bush signed to give relief to people with past dues mortgages ineed more info where i can go.
thanks-564-8986
gloria iris torres
torresservices@belllsotuh.net
786
Anonymous - 4:01 PM - Jan. 23, 2008
RE: What's up with the new FHA loans?
Hi Gloria:
The program you're asking about is called FHASecure and allows people with ARM loans that are behind in their payments to refinance into new FHA loans under certain circumstances.
Please go here for further info.
Andi
Andi Durbin - 4:37 PM - Jan. 23, 2008
RE: What's up with the new FHA loans?
The whole this is a joke. It is suppose to help people from forclosure, yet in order to go into forclosure you have to be 3mo. behind on payments. Yet if you have more then 1 30day late on your house payment you don't qualify. So all those people out there who are behind still will not recieve any help. Goverment at it's finest.
Anonymous - 3:42 PM - Oct. 9, 2008
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