In recent years, FHA loans have had a decreasing market share for a variety of reasons. Loan limits, down payment requirements, repair requirements, as well as the rising popularity of neg am loans and interest only options have contributed to a lack of FHA loans. With subprime securitizations taking a huge hit currently and with underwriting standards changing on an almost daily basis, it would be nice to see FHA make a comeback.
The Expanding Homeownership Act of 2006 which has passed the House vote hopes to catch up FHA Lending with the times. As outlined at http://www.theorator.com/bills109/hr5121.html , this FHA reform bill is looking at longer amortizations, possible risk-based pricing, simplified down payments, and higher FHA loan limits. Unfortunately, a bill takes some time to be passed through legislative channels. Coupled with FHA's relaxed standards on appraisal issues in recent years, FHA Lending could be in vogue again. The question is when.
Michael Byrne
Mortgage Specialist
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Marchel, thanks for the response! I think with automated underwriting and a little knowledge of the process, there is actually little difference between FHA and conventional financing. I think is FHA is great, particularly for owner-occupied mult-family purchases.
Thanks Lewis- a good LO should be able to score an automated approval through DU and/or LP for a lot of borrowers who end up going subprime. Both Fannie and Freddie have "just missed" expanded approvals as well, with slightly higher pricing. In fact, that will be my next blog.
Michael, I think you are going to see the FHA make a "big time" comeback. In fact a high percentage of Settlement Agents who are fairly new to the business have almost no experience with closing an FHA loan.
The gains in sub-prime lending (if not outright predatory lending), have been at the expense of the good old FHA. Of course the requirements are greater and the time involved is longer, but the bottom line is that we all allowed this nightmare to go unabated for far too long.
"Cantaloupe"
I love using FHA, I try to get everyone of my clients approved that way. Hey I would like it if you would join our group and post there.
http://activerain.com/groups/KentuckyProfessionals
Thanks again and have a great day
Ben
I HAVE BEEN DOING FHA LOANS SINCE THE LATE 70'S
I HAVE A FHA LOAN ON MY HOME..
THIS BILL NEEEDS TO PASS.
I HAVE BEEN DOING FHA LOANS SINCE THE LATE 70'S
I HAVE A FHA LOAN ON MY HOME..
THIS BILL NEEEDS TO PASS.