FHA Mortgage Guide

It’s the start of a new fiscal year in Washington, and for the FHA it’s been a great time to be in the mortgage insurance business.

The latest figures from HUD show that FHA applications had an annual run rate of 1,285,800 inquiries in the first 15 days in October. This is up 74.6% when compared with a year ago.

Actual FHA applications during the first two weeks of October totaled 51,287 inquires, a figure that rose a whopping 99.4% over the past year.

A total of 25,823 loans were actually endorsed. Of this number, 53.1% were for home purchases, 32.1% were refinances and 14.9% or reverse loans, or what HUD calls “home-equity conversion mortgages” or HECMs.

What these figures mean is that the FHA program — which hadactually been on the ropes for the past couple of years — is doing quite well. The program is insuring loans, loss levels are tolerable, and a vast new market for government insurance has begun to appear with the introduction of the FHASecure product. No one would be surprised if fiscal 2008 turned out to be another banner year for the government program.

It’s just a thought, but with the subprime market fairly comatose and a lot of loan officers looking for a few extra dollars, do you think it may be possible that some folks are trying to sell FHA loans without proper authorization or for too much money?
I wonder about this because the FHA has just […] read more

A reader offers a short comment regarding lender practices and in the process raises a number of basic questions:
“How can a lender predict if the borrower will start buying over their means…every American does this!”
Nope, every American does not borrow beyond their means. Borrowers overwhelmingly are not facing foreclosure and about 35 percent of all […] read more

Over on Lenderama, columnist Gina Gardner says that if borrowers feel abused by lenders they have significant opportunities to obtain relief.
“If lenders misrepresent a product,” says Garner, “the borrowers have recourse already. And they’d be exercising it if they were in fact defrauded.”
Let’s see: If you check Google for the term medical malpractice you get […] read more

Prof. Samuel D. Bornstein has provided an interesting post regarding lenders, liability and financial literacy. This is a post which deserves more than a short response, so first allow me to re-post the professor’s comment before addressing the issues he raises.
“Congress,” says the professor, “is considering legislation to hold the Lender liable for loans made […] read more

HUD has decided that will delay it’s new anti-charity rule for two prominent down-payment assistance organizations.
The downpayment assistance ban goes into effect for third-party charities as of October 31st. There are two exceptions, however:
*The Nehemiah Corporation of America, due to a previous Settlement Agreement and as discussed in the rule, is granted relief from the […] read more

On the mortgage reform front, Rep. Bradley Miller (D-NC) has introduced H.R. 3915.
This is a bill which would — oh my — actually make lenders responsible to borrowers for the loans they sell. Indeed, a lender could get sued for providing a mortgage that’s not in the best interest of the borrower, a revolutionary concept […] read more

It’s always great to dress up stuff by creating new and innovative names.
Instead of firing people, we “downsize” companies. There, doesn’t that sound better?
One of our commentators, says that many borrowers have been helped by affordability products.
Let’s see. Could there be other names for loans which are leading so many people to foreclosure and financial […] read more

There’s a lot of talk that fraud is at the heart of the mortgage meltdown. I think this is likely true to a great extent, but I am uncertain whether to blame borrowers, loan officers or underwriters.
Writing on the well-respected blog at EconLog.Org, Arnold King makes an interesting point:
“When I was at Freddie Mac, we […] read more

Countrywide has announced a $16 billion “Home Preservation Program” that it says will “benefit more than 80,000 borrowers.”
Under intense pressure, in part because it’s the largest mortgage lender in the country, Countrywide says it will modify “up to” $16 billion in loans from buyers facing default.
No doubt, $16 billion and 80,000 are big numbers. However, […] read more

I generally like to get stuff in the mail. I like some catalogs and coupons — and I especially like checks from clients.
But what I don’t like are the ads from mortgage companies telling me to refinance to a “lower” rate. If you look carefully at such ads you will see that they are not […] read more

With many areas of the country showing stalled and declining real estate markets, can borrowers in such communities still get FHA loans?
You bet. Curiously, the FHA addressed the issue of financing in down markets in a September letter to lenders. What’s most interesting about the guidelines from HUD is what they have to say to […] read more

As reported a few days ago, the FHA loan limit will remain the same in 2008 unless some form of FHA modernization passes in Washington.
This is a matter of some griping because the FHA program has little value in the nation’s more expensive metro areas such as New York, Boston, Washington and much of California. […] read more

The FHA continues to show strong demand even as much of the mortgage marketplace is in disarray.
For the fiscal year which ended September 30th, HUD reports that it received 768,770 FHA applications under the Single Family Programs. Of this total, 60,081 applications covered proposed construction and 708,689 existing home transactions.
From this application volume, FHA endorsed […] read more

I came across a really good explanation of prepayment penalties by Morgan Brown, a California mortgage lender who operates BlownMortgage.com.
For FHA borrowers prepayment penalties are not an issue — they’re not allowed. But in the untamed private sector, you can pay big money when lenders slip in a prepayment penalty.
Morgan has a plain-language discussion of […] read more

In the world of mortgage financing there are “conventional” loans and “jumbo” mortgages. A conventional loan meets certain criteria but is limited to $417,000 for single-family homes in the continental US. (The limit is 50% higher in Alaska, Hawaii, Guam, and the U.S. Virgin Islands.)
If you borrow more than $417,000 then you have a “jumbo” […] read more

The National Association of Realtors is claiming that the mortgage market has eased and therefore we should see a sales increase at the start of next year.
It may well be true that mortgage standards are beginning to become less severe than what we saw in late summer. However, the fact remains that we have far […] read more

Beazer Homes is reporting that it may owe money to Uncle Sam in connection with FHA loans originated by its mortgage lending subsidiary.
In general terms, lenders can be required to buy-back loans if the borrower does not make one or more payments within the first 60 to 90 days of the loan term or the […] read more

A new effort supported by the Treasury Department and HUD to help borrowers has been introduced.
What it actually does is unclear.
According to Treasury Secretary Henry Paulson this project involves “11 of the largest mortgage servicers representing 60 percent of the mortgages in America, several of the leading mortgage counselors, investors, and large trade organizations have […] read more

The following news release has just been distributed by the House Financial Services Committee:
Washington, DC — The U.S. House of Representatives today passed H.R. 2895, the National Affordable Housing Trust Fund Act of 2007 by a vote of 264 to 148. The National Affordable Housing Trust Fund will be the largest expansion in federal […] read more