FHA Training, Guideline Updates and Advice
January 26th, 2008 — Consumer Information, Industry Information, Interest Rates
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Every time the Federal Reserve cuts the Fed Funds rate, as they did by .75 percent the other day, mortgage companies are deluged by calls from borrowers with loans in process hoping they can get a better rate. Most of the time the answer is no! Don’t worry though - this isn’t your loan officer trying to take advantage of lower rates to make more money without passing it along to the consumer.
January 23rd, 2008 — Consumer Information, HUD Regulations, How FHA Works, Industry Information
Many subprime loans for borrowers with past credit problems have substantial prepayment penalties.
FHA loans do not have prepayment penalties with one small exception. When you pay off an FHA loan through either selling or refinancing the property, you must pay interest through the end of the month in which you are paying off the mortgage. So if you are selling or refinancing to pay off an FHA mortgage, make sure your payoff reaches your lender as close to the end of the month as possible. Otherwise, you will be paying interest for the rest of the month after you have already paid off the mortgage.
January 16th, 2008 — Consumer Information, FHA Updates, FHASecure, H.R. 1852, HUD Regulations, How FHA Works, Industry Information, Refinancing
Two issues today.
Personally, I have pretty much given up on FHASecure. If I find someone who miraculously actually qualifies for the program, their second mortgage holder often insanely refuses to resubordinate their lien.
It is my opinion, though, that the substantial publicity for this loan program has caused more people to look into using the FHA program after they thought they had no way to refinance their mortgage due to falling home values. There has been a real value to that. The standard FHA program already provides a solution for many. They had no other choice but FHA, but they never would have tried FHA without the publicity.
Amusingly, as often occurs in government bureaucracies headed by political appointees, HUD has seemed to be chasing their tail lately trying to put the best spin on the FHASecure program. Now, according to an article by Peter G. Miller in Realty Times, they have come up with the claim that the term FHASecure really applies to any conventional to FHA refinance! Huh? I know what I heard in the conference calls and read in the mortgagee letter, and this is definitely not what it started out as.
January 12th, 2008 — Consumer Information, How FHA Works, Industry Information
Due to one of the comments that came in on my last post, I need to make myself a little more clear.
I’m not talking about the underwriters but the underwriting rules themselves. The underwriters were just following them. The commenter felt that while the boom was underway conventional underwriters were pressured to to do their jobs too quickly and thus made mistakes.
January 11th, 2008 — Consumer Information, How FHA Works, Industry Information
There is an article on the BusinessWeek.com site that confirms something that I have been thinking for some time. The author, Preshant Gopal, points out that some of the areas where foreclosures are concentrated are not the areas where adjustable rate mortgages are concentrated. In areas where the value bubble has burst, borrowers are walking away from homes whether they have an ARM or not.
January 6th, 2008 — FHA Appraisals, HUD Regulations, How FHA Works, Industry Information
One of my biggest pet peeves is the phrase I often hear bandied about that ‘FHA is the new subprime.”
No, it isn’t. And knock on wood, it never will be. FHA does provide an opportunity for borrowers who have had credit problems to get a loan. But the differences between FHA doing that and subprime loans doing that are that FHA requires common sense from the underwriter and FHA holds the lender accountable for their default rate. There isn’t an arbitrary rule that says “OK, you’ve been late 1×30 on your mortgage in the last twelve months, so you qualify. We don’t care why it happened, or whether the situation is likely to happen again in the next 3 months. You fit the matrix, you get the loan.”
January 5th, 2008 — FHA Updates, Fraud, H.R. 1852, Industry Information
FHA Mortgage Reform could again be delayed by ridiculous political antics. Who else but a bunch of politicians could take what should be a simple sprucing up of a program which is basically good enough already, needing only to be expanded to include a few more people, and turn it into a multi-year ordeal.
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