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On FHA Mortgage Guide, syndicated columnist Peter Miller points out today that the number of FHA mortgage endorsements is headed down when comparing the first two weeks of July with the first two weeks of August.
“There were 77,608 FHA endorsements during the first two weeks of August — that’s significantly less than the 82,079 loans that were insured during the last two weeks of July.”
The Housing and Economic Recovery Act of 2008 goes into effect on October 1, 2008. As part of this Act, Congress placed a one year moratorium on risk based mortgage insurance premiums on FHA loans.
Under the risk based premium structure that HUD put into effect on July 14, 2008, borrowers with better credit and lower loan to value mortgages are able to pay lower rates while riskier loans carry higher insurance rates. A perfectly sensible system that FHA statistics show may actually be a major benefit to lower income borrowers since this members of this group with FHA loans have been shown to have higher credit scores on FHA loans.
There is a great conversation going on about a Friday, August 21, 2008 post over on the Blown Mortgage blog regarding seller funded down payment assistance programs. I encourage everyone to go and take a look at it before reading the rest of this column. The conversation is centered around a guest post by Josh Lewis entitled “RIP FHA Down Payment Assistance Programs, Not So Fast“.
As most know, the “Housing and Economic Recovery Act of 2008” which has been passed and signed into law to take effect in October, bans seller assisted down payment programs such as the Nehemiah, Ameridream, Futures Home Assistance. In my opinion, this drastic overreaction is the result of political pressure and some doubtful statistics. I have written about it several times elsewhere on this site. Scott Syphax, President and CEO of Nehemiah Corporation of North America pointed out the most significant of the problems with these statistics in an editorial reply in the Sacramento Bee on Sunday. In it, Mr. Syphax pointed out:
“Research would have shown that data used by FHA and the Government Accountability Office comes from a data warehouse that the U.S. Department of Housing and Urban Development’s own inspector general cited as unreliable. In short, FHA undercounts the number of DPA loans by up to three times and divides that number into the number of claims it pays.”
