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  1. New Chief To Oversee FHA Home Loan Programs

    By on April 4, 2011

    FHA home loans, FHA streamline refinance, low down payment mortgageBob Ryan will take over running the Federal Housing Administration today as the FHA’s acting commissioner. Ryan, formerly the FHA’s chief risk officer, replaces David Stevens, who resigned to be chief executive of the Mortgage Bankers Association, an industry trade group.

    FHA lending exploded after the financial crisis, filling a vacuum left by private lenders. FHA home loans, which are insured by the FHA but made by private FHA-approved lenders, became the only option for home buyers with small down payments.

    FHA mortgages offer mortgage financing for low- and moderate-income borrowers and allow down payments as small as 3.5 percent. The FHA now insures about a third of home purchases, compared to less than 4 percent before the housing bubble burst.

    Plus, the FHA Streamline Refinance program allows homeowners with current FHA loans to refinance into current low mortgage rates without credit or income documentation and sometimes without an appraisal.

    Congress raised FHA home limit from $362,790 to $729,750 in high-cost markets during the housing market collapse. That helped prop up home values, but some experts worry that it increased risk for the FHA. More FHA loans went bad, but the agency now says it fewer are going delinquent.

    Ryan joined the FHA 2009 as its first chief risk officer. Before that, he was an executive at Freddie Mac for 26 years, working in a range of senior positions in the capital markets and single-family mortgage divisions. The permanent FHA commissioner must be nominated by the president and confirmed by the Senate.

    Category: FHA

  2. Fewer FHA Loans Going Bad

    By on March 24, 2011

    fha loans, fha mortgagesThe serious delinquency rate of mortgages insured by the Federal Housing Administration went down from 8.9 percent a year ago to 8.29 percent the first quarter of this year.

    Some mortgage experts have worried about more FHA home loans becoming delinquent after FHA loan originations exploded in recent years, in a way replacing the subprime loans offered during the run up in housing prices. However, the latest delinquency figures indicate the FHA is through its worst period and problem is under control.

    As subprime loans disappeared and lenders tightened their mortgage requirements following the financial crisis, FHA loans, which are insured by the agency but made through private FHA-approved lenders,  have become the only option for many borrowers with imperfect credit, lower incomes or small down payments. In addition, FHA home loan rates are competitive.

    FHA believes higher quality mortgages originated from 2009 through 2011 prompted the decline in delinquencies. Continue Reading…

    Category: FHA

  3. FHA Home Loan Limit Should Be Reduced, Study Warns

    By on February 15, 2011

    FHA home loan, low downpayment loanFHA home loans should be limited to smaller mortgages to reduce FHA’s “large and risky market share,” argue housing experts at George Washington University.

    FHA home loans, which permit down payments as low as 3.5 percent and looser restrictions on credit and income, have helped many borrowers refinance or purchase homes, especially during the credit crunch. The low down payment is especially helpful for first-time home buyers, and the FHA Streamline Refinance program allows homeowners to refinance into current low mortgage rates without credit or income documentation and sometimes without an appraisal.

    The GWU study provides another bullet to those seeking to shoot down expanded FHA loan limits. That should prompt homeowners and home buyers to seek FHA mortgages while they still can. Learn more about FHA home loans.

    Congress allowed the size limit for FHA mortgages to skyrocket during the housing crisis, from $362,790 to $729,750 in high-cost markets. That helped prop up home values but it’s also riskier for the FHA, a government agency that insures the home loans.

    Loans over $350,000 perform 20 percent worse than smaller loans traditionally insured by FHA, according to the study from the GWU Center for Real Estate and Urban Analysis. And the FHA’s share of larger mortgages has jumped substantially. Continue Reading…

    Category: FHA

  4. Mortgage Agencies Butt Heads Over Plan To Help Underwater Homeowners

    By on December 10, 2010

    help for underwater homeowners, reduce mortgage balancesA proposal to have Fannie Mae and Freddie Mac reduce mortgage balances of underwater homeowners is again in the news.

    Government agencies are butting heads over the idea, according to an article in The Washington Post today. The Federal Housing Administration or FHA, which has FHA Short to help underwater borrowers, wants Fannie and Freddie to offer a similar program to help underwater homeowners.

    But Fannie’s and Freddie’s regulator, the Federal Housing Finance Agency is against the idea. The Wall Street Journal, first reporting the story yesterday, also mentioned that Fannie and Freddie are resisting pressure from the Obama Administration to join FHA Short and cut mortgage balances.

    Not surprisingly, Fannie, Freddie and their regulator are worried about losing money, in addition to being skeptical about the program’s effectiveness.

    Its effectiveness should be a concern. Since September, FHA Short has helped all of three homeowners. Lack of lender participation, which is voluntary as well as the program’s strict requirements are cited as obstacles.

    Lenders offer other options to help homeowners avoid foreclosure, and Fannie and Freddie can still offer low current mortgage rates to underwater homeowners through the Home Affordable Refinance Program.

    Underwater homeowners have first mortgage balances that are larger than their home’s current market balance. Reducing their mortgage balances is supposed to be a good way to help them keep their homes and continue making mortgage payments. Continue Reading…

    Category: FHA, foreclosures, Loan Modification, Mortgage Regulations

  5. Fannie Mae and Freddie Mac May Help Underwater Homeowners

    By on December 8, 2010

    The Obama Administration is reportedly pressuring Fannie Mae and Freddie Mac to reduce mortgage balances of underwater homeowners.

    The administration wants the two mortgage giants tounderwater homeowners, underwater mortgages, Fannie Mae, Freddie Mac join the Federal Housing Administration program that lowers mortgage balances of homeowners with first mortgages larger than their home values, The Wall Street Journal reports, citing “people familiar with the situation.”

    That would be a big deal if it happens – Fannie Mae and Freddie Mac own or guarantee about half of the first mortgages in the country. But then again, based on the FHA’s experience, you’d have to wonder if it will work.

    Obama’s people evidently believe that reducing mortgage balances will help the housing market and reduce foreclosures. But the problem is that you don’t get something for nothing, and lenders and investors owning mortgages lose money when they reduce mortgage balances.

    Fannie Mae and Freddie Mac are now under government conservatorship, so if they lose money U.S. taxpayers lose. And their regulator, the Federal Housing Finance Agency, is charged with saving the taxpayers money. As it stands now, the mortgage giants already owe the government $134 billion.

    If they cut mortgage balances, they can’t try to force the lender to buyback the loan and can’t file a claim with the mortgage insurance company. That’s why Fannie Mae and Freddie Mac don’t do reduce mortgage balances now, or at least rarely do.

    Its effectiveness is another issue.

    Federal officials say 500,000 to 1.5 million homeowners could benefit from such a program, according to the WSJ. Even if that’s true, it would be a drop in the bucket. Some researchers estimate that almost a quarter of households with mortgages might be underwater.

    And would it really prevent mortgage defaults and foreclosures? Continue Reading…

    Category: FHA, Loan Modification, Refinance

  6. Reverse Mortgage Program Offers Savings For Seniors

    By on October 4, 2010

    Seniors will be able to save with a new reverse mortgage product from the FHA.

    The Home Equity Conversion Mortgage Saver is designed to lower upfront closing costs for smaller loan amounts. The HECM Saver will charge an initial upfront mortgage insurance premium of 0.01 percent of the loan amount, compared to the 2 percent insurance premium

    reverse mortgage, HECM Saver, HECM reverse mortgage

    Thinking of a HECM reverse mortgage?

    of FHA’s standard reverse mortgage program, known appropriately as the HECM Standard.

    Both reverse mortgage products will entail annual insurance premiums of 1.25 percent of the loan amount.

    Reverse mortgages allow seniors to convert their home equity into cash. Reverse mortgages can be a line of credit or a single upfront payment, but unlike traditional home equity loans they don’t require monthly payments. Although the FHA makes an exception if the homeowner fails to upkeep the home, the reverse mortgages are paid off only when seniors moves out of their homes.

    HECM loans have been criticized for having high fees, a disadvantage the FHA hopes to address with the HECM Saver, said FHA Commissioner David Stevens.

    In one disadvantaged, the HECM Saver will not allow home owners to borrow as much against their homes, about 10 to 18 percent less, than the standard program. How much seniors can borrow depends on their age and the value of their homes, with mortgages capped at $417,000 and $729,750 in high-cost areas.

    To get a reverse mortgage, homeowners must be at least 62 years old and have either no mortgage or only a small balance remaining. They also have to meet with a HUD-approved housing counselor to discuss the home loan and possible alternatives.

    The HECM Saver will increase the use of reverse mortgages. More seniors are tapping their home equity as the population ages. The number of reverse mortgages increased from about 6,600 in 2000 to over 112,000 in fiscal year 2008, according to the nonprofit National Council on Aging. The proportion of seniors with some type of home loan, mostly conventional mortgages or a home equity lines of credit, grew from 24 percent in 1999 to 32 percent in 2007.

    Category: FHA, Reverse Mortgages

  7. New Fees For FHA Loans Decrease Upfront Costs

    By on October 4, 2010
    FHA loans, FHA refinance, first-time home buyer, low down payment mortgage

    HUD's headquarters towers over homes in Washington, D.C.

    New changes to mortgage insurance premium fees for FHA loans make it easier for home buyers to purchase a home. The FHA is lowering its upfront insurance premium from 2.25 to 1 percent of the loan amount.

    On the other hand,  the FHA, which is part of the Department of Housing and Urban Development, is increasing its annual insurance premium from 0.55 percent of the loan amount to 0.9 percent. The ongoing MIP will be 0.85 percent for mortgages that are 95 percent or less than the property value.

    That means home buyers will face smaller upfront costs. That’s good news for cash-strapped home buyers, especially first-time home buyers. The trade off is higher long-term ongoing costs because of the higher annual MIP.

    The new fees will also help current homeowners seeking an FHA mortgage refinance – at least in the short term. The new fees cover the FHA streamline mortgage, a program that waives credit and income checks for homeowners who already have an FHA home loan and who want a new mortgage refinance.

    Mortgage insurance premiums for FHA loans with terms of 15 years or less remain unchanged at 0.25 percent for loans to value over 90 percent. Another piece good news for homeowners is that they should eventually rid themselves of the insurance payments after they build up equity in their homes. For instance, homeowners with terms of 15 years or less and a loan to value of 90 percent or less don’t pay an annual MIP.

    If you get an FHA loan, you pay the MIP monthly as part of your monthly mortgage payment.

    After subprime lending disappeared when the housing price bubble burst a few years ago, FHA-insured loans became the only low down payment mortgage program around. You can buy a home with as little as 3.5 percent down with an FHA loan. Other types low down payment mortgages, also known as high loan to value mortgages, have still not returned.

    As borrowers swarmed to FHA-loans, defaults on its loans jumped and many observers worried about lax underwriting and poor loan quality.

    The FHA says it wants to meet the needs of the housing market while at the same time increasing its Mutual Mortgage Insurance fund without disrupting the housing market. FHA doesn’t offer home mortgages itself, but insures home loans that made through private lenders it has approved.

    Private mortgage insurance companies hope the increase in the FHA MIP will give them an advantage and help them regain lost market share.

    Category: FHA, First Time Home Buyer, Purchase, Refinance

  8. Congress Extends Conforming Loan Limits

    By on October 1, 2010
    luxury home, conforming loan limits, jumbo mortgage, jumbo mortgage rates

    A luxury home like this might need a jumbo mortgage and could benefit from a higher conforming loan limit.

    Congress has voted to extend the higher conforming loan limits for jumbo mortgages through Sept. 30, 2011.

    President Obama, who supports extending the conforming loan limit, is expected to sign the measure soon.

    The conforming loan limit will still be able to go as high as $729, 750 in high cost areas, which include densely populated areas around major cities like New York, Washington D.C., San Francisco and Los Angeles. Anything over that amount will be considered a nonconforming loan, or a jumbo mortgage, and face higher mortgage interest rates. Check conforming loan limits.

    If Congress had not acted, the conforming loan limit in high cost areas would have retreated to $625,500 after Dec. 31, 2010. In most areas, home loan amounts over $417,000 are considered jumbo mortgages.

    Applies to FHA Loan Limits

    The extension also applies to loan limits for FHA insured loans.

    Proponents of the conforming loan limit extension argue that housing markets would falter, even collapse, without the higher limits. Opponents of government involvement are probably grinding their teeth. Those against the extension say fears of the sky falling are overblown. The government should try to get out of the mortgage business and let private markets return.

    Government involvement in housing finance has caused huge losses to taxpayers and is not necessary to achieve the benefits claimed by its proponents, argues Peter J. Wallison, a scholar for the American Enterprise Institute. Instead of trying to find ways that the government can stay involved in housing finance, he says, the new Congress should consider how to withdraw the government from any role in financing prime mortgages and put private-financing mechanisms into place.

    Nonconforming mortgage rates are higher because investors see them as riskier since they are not purchased or guaranteed by Fannie Mae or Freddie Mac.

    While the impact on housing markets is not certain. Many Congressmen probably didn’t want to take any chances.

    Realtors Are Happy

    The National Association of Realtors and California Association of Realtors were happy about the conforming loan limit extension.

    “Without the extension of the higher loan limits, many California borrowers would have a harder time refinancing homes and obtaining financing for new home purchases,” said CAR President Steve Goddard.

    Mortgage lenders, as well as borrowers, also like higher conforming loan limits.

    “Extending the existing limits is essential to helping borrowers continue to have access to affordable long-term, fixed-rate mortgage credit in today’s struggling economy,” said Robert E. Story, Mortgage Bankers Association chairman. “The current limits have been a key component of keeping the mortgage market functioning, helping keep mortgage interest rates low for consumers who want to purchase a home or refinance an existing mortgage.”

    Category: FHA, Jumbo Mortgage, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates

  9. FHA Mortgage Rates for July 29, 2010

    1 By on July 29, 2010

    FHA Mortgage RatesTotal Mortgage has some of the finest FHA mortgage programs in the country. In order to obtain a FHA mortgage you must first find an FHA-approved lender. Luckily, Total Mortgage is FHA-approved.

    FHA fixed rate mortgages are very similar to a conventional fixed rate mortgage. Both have mortgage rates that remain fixed throughout the life of the loan. The difference between the two is that an FHA mortgage is insured by the Federal Housing Administration. This means that if a borrower defaults on his/her loan the Federal Housing Administration is still liable to pay off the lender.

    FHA mortgage programs were designed to assist borrowers who cannot meet the criteria for a conventional loan. FHA mortgages have more lenient requirements including lesser credit score requirement. Other benefits of a FHA mortgage include lower mortgage rates, considerably smaller down payments and more refinancing options. Continue Reading…

    Category: FHA

  10. FHA Mortgage Loans- How to Qualify?

    1 By on July 22, 2010

    Apply for an FHA MortgageThe FHA, Federal Housing Administration, insures mortgage so that borrowers who may not be able to meet the strict criteria for a conventional loan can still get a mortgage. FHA mortgages rates are often lower than normal mortgage rates. The FHA does not provide the loan but instead insures the loan so that the lender knows that if the borrower defaults on the loan they will still get paid. Qualifying for an FHA mortgage requires certain steps. Before you apply for an FHA loan you should consider getting either pre-qualified or pre-approved. When it comes to an FHA mortgage a pre-approval is more beneficial than being pre-qualified as it requires an investigation into you income, assets, liabilities, and credit.

    FHA mortgages are the most flexible home loans to qualify for. When trying to prequalify there are certain things that are essential.

    Continue Reading…

    Category: FHA

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