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As a loan officer, I first began using seller paid down payment assistance programs with my customers almost as soon as the program was available in my area. I remember very clearly the feeling I had at the time that the programs could not last long before HUD put a stop to them. I told every customer I prequalified for the first couple of years that they better hurry up and find a home because their down payment program couldn’t possibly last very long.
On Thursday June 19, 2008 HUD issued a press release indicating that they were sending out letters to 675,000 “at risk” homeowners. As has been the case with most of HUD’s efforts for troubled borrowers, the gist of the letter leads this writer to believe that HUD is really going after borrowers with good credit. Syndicated author Peter Miller agrees with this viewpoint in his Friday post on FHA Mortgage Guide. As he notes, many of these borrowers might well have qualified for an FHA loan in the first place.
I’m sure you’ve seen on the news by now that Fannie Mae and Freddie Mac loan limits are going up due to the fiscal stimulus bill pushed through Congress recently. The good news is that this also means that FHA limits are going up temporarily. They are even going up to as high as $729,750 in accordance with the original House of Representatives proposal for FHA reform instead of the lower Senate bill limits.
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.
I almost can’t believe what I just read in Reuters. I’ve picked up on it a little bit as loan officers on the street are telling me that FHASecure isn’t worth the effort, and it looks like this is showing up in the actual numbers of closed loans. According to an article by Reuters Washington correspondent Patrick Rucker on Monday, only 266 FHASecure loans have been originated to date!
The FHASecure program was officially announced in September 2007, however it was not until the last few weeks that a “pool” was created for the mortgage backed securities necessary to raise the money to fund loans made under the program. In spite of that delay, FHA Commissioner Brian Montgomery announced before a Congressional hearing on Friday, November 2, 2007 that 540 lenders are officially offering the program and more than 70,000 conventional borrowers have applied for FHA loans under the program!
If you are divorcing or already divorced, and the divorce decree requires that you remove your spouse from the loan on the property AND pay them their equity AND you’ve got a few credit problems, don’t panic. For an FHA refinance, this is still considered a rate/term refinance even though you are paying out cash to you ex-spouse.
Purchasers of manufactured homes often use short term financing from a bank (for example, a five year balloon note) or short term, high interest rate owner financing to cover the cost of setting up their new home. Since each of these methods of financing the manufactured home must be paid off in a short period of time, owners of manufactured homes should begin looking for replacement financing as early as the end of the first year. The end of the first year is the beginning of the time that the loan can be based on the appraised value of the home instead of its original sales price.
