There was an interesting article in the Wall Street Journal which you can find here - “Uncle Subprime“.
Take a look at the article. It points out how seriously misguided our lawmakers are, and how completely unaware they always seem to be of the unintended consequences of what they do. Whatever proposal comes down the pike, they just can’t resist gutting it and leaving the worst, most pandering, most foolish elements to become law.
According to Treasury Secretary Hank Paulson on Friday, a deal is close on the FHA modernization bill. This isn’t the first time I’ve heard this, so I’ll wait and see. The story published on Bloomberg.com is also light on some of the important details.
Just a short post to let you know that HUD has acted faster than I have seen them do anything in the last 20 years. The higher loan limits are now official and its time for all loan officers to hit the phones to see how many people we can help. The limits are different for each county. You can find out the limit in your county by clicking on the “FHA Loan Limits” link at the top of the page. I can honestly say that I am very pleasantly surprised. I didn’t expect anything to happen on this for several months.
Looks like there is hope after all. I had feared that FHA mortgage reform would die a slow death once the FHA limits were raised as part of the recent fiscal stimulus package. But it looks like FHA reform is actually moving ahead.
According to Congressional Quarterly, (in an article highlighted on the KnowledgePlex website since viewing the original requires a subscription) the major stumbling block to moving forward with the bill has been the House of Representatives’ addition of an affordable housing trust fund to their version of the bill. An agreement has been reached to move ahead without either establishing nor pre-empting the fund.
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.
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.
Since the original House Bill 1852 passed way back in September one element of that bill has caused me more than a little bit of concern. The House version of the FHA Modernization bill makes it possible for a mortgage broker who is not presently able to meet the requirements for FHA lender approval to use a bond to qualify instead of meeting the traditional audited net worth requirements.
