FHA and Investor Specialist

     The Federal Housing Authority is not known for making changes quickly.  However, in the case of the FHA Secure product, HUD has acted quickly to bring the FHA Secure product to market.  Many times programs and products are announced and then there is a huge lag time before consumers can actually take advantage of the announced programs.  The main benefit of the FHA Secure product to the consumer is that borrowers who have fallen behind only since their adjustable rate loan adjusted upward may still be eligible to refinance into an FHA loan.  The basic parameters are as follows:

     -The mortgage being paid off must be a non-FHA ARM that has reset.

     -The mortgage at a minimum has to have been current in the 6 months prior to the loan reset.

     -Loans must be in according to typical FHA refinancing loan limits* and LTV's(at least 97.15% in most cases) 

     -Program will allow for lender to write loan a loan balance or subordinate a 2nd lien or portion of the first  mortgage to comply with FHA loan limits and LTV's.

     It appears the main concerns expressed in guidelines are that appraisals be of strong quality, particularly in declining markets. Secondly, that Loan Officers do not "coach" consumers to fall behind on payments, then refinance and keep as cash the amount of payments not made.

     *FHA Loan Limits by County: https://entp.hud.gov/idapp/html/hicostlook.cfm

Michael Byrne, Mortgage Banker www.mortgageprosforum.com

     With all of the talk lately about the new FHA Secure program, I just thought I would go over some of my favorite points about the pre-FHA Secure FHA Refinancing programs.  There are many benefits for the consumer and even a few things that could help a real estate agent sell more properties.  This highlights some ways a consumer can pull out equity through a cash-out loan to purchase an investment  property with some of FHA's niches:

                -A recently listed property does not immediately disqualify a borrower from refinancing their property.  Many consumers are now deciding to take their home off the market and some are looking to pull out some equity, only to find out most lender guidelines frown on lending on recently listed properties.  An FHA loan could be the answer.

                -Cash-Out up to 95% on 1-2 unit properties and 85% on 3-4 unit properties, with no pricing hit!  A client who has been a successful landlord with a 2-4 unit owner-occupied property could pull out some equity with an FHA loan to purchase an additional investment property.

                -FHA loans have no minimum credit score requirement.   A clean 12 month mortgage history is (almost always) required.  

      My Sitemap has more guidelines and information on how FHA loans work.  Happy Selling!

     An article in CNNMoney by Jeanne Sahadi written Here makes several points about the changes in the mortgage industry, with most of the changes being a back to basics approach for mortgage lending with fewer piggyback seconds and an increased emphasis on FHA Lending.  The article also points out three major changes lawmakers are looking to make regarding FHA Loans.  They are raising the loan limits, reducing the down payment requirements, and reducing the complexity of an FHA loan.

     I agree that FHA loan limits should be increased, at least to the current conforming loan limit of $417,000 and maybe even $625,000 for high cost areas.  However, I disagree with the elimination of the 3% down payment requirement and the reduction of FHA's "complexity".  Many homebuyers do struggle to save the required 3% for a down payment, but that is why FHA works in my opinion:  3% is enough money invested in a transaction for some people to ensure that they make every effort to keep their home.  As far as FHA's supposed complexity, the Federal Housing Authority has already reduced the appraisal requirements for FHA appraisals, and any additional disclosures the borrower has to sign are designed to protect and help them.  If more FHA loans were written rather than 80/20 loans in the last 5 years, we would not be in the precarious position we are now.

Michael Byrne, Mortgage Banker  www.mortgageprosforum.com

Not a whole lot of attention has been given in the US media to the Rugby World Cup.  As a fan and former player of the world's greatest team sport, I have been following some of the World Cup via the internet.  I am just wondering if any other 'rainers are following the 2007 Rugby World Cup.  The South African Sprinboks are the favorites for the Final this Saturday against England.  Hopefully I'll find a local establishment that is carrying the live feed this Saturday.

Anyone?

   In this recent article in CNN Money: CNNMoney Hank Paulson Article , Treasury Secretary Hank Paulson stated he has no intention in bailing out lenders or speculators who have fallen on tough times due to recent real estate declines.  He stated only 50% of past due borrowers ever contact their loan servicer, and mentions that the consumer should share in some of the blame for the current situation due to risky behavior. Mr. Paulson feels a more proactive approach will benefit consumers, including the formation of an alliance called "Hope Now" which is designed to help borrowers who have fallen past due on their loans.  This alliance will work with clients to do loan modifications and/or refinance into better terms.

    Mr. Paulson also noted that a nationwide licensing program should be enacted for all Loan Officers, that the Truth In Lending Act disclosures should be modified to be more consumer friendly, and that FHA financing should play a bigger part in the mortgage markets.  I agree with all of his points.  It is not the governments role to bail out folks, but the government should play a part in monitoring and helping those who want help.

     What are your thoughts?

Michael Byrne, Mortgage Banker www.mortgageprosforum.com