FHA Mortgage Guide

We keep getting emails regarding the FHASecure program, the FHA mortgage plan announced by President Bush in August that was specifically designed to save delinquent conventional borrowers.

HUD says “in only the first 4 months of FHASecure, more than 40,000 households have refinanced under the new housing insurance program to protect their families’ investment in the American Dream.”

This is about as believable as unicorns, weapons of mass destruction and evidence that the earth is flat.

HUD’s own FHA Outlook reports show that only a few hundred delinquent conventional borrowers have been able to get FHA financing. But HUD — undeterred by reality — simply says that FHASecure (or FHA Secure as it is sometimes known) now includes ALL conventional borrowers who use FHA financing. This makes no sense, since conventional borrowers with good credit do not need the FHASecure program, they can simply get regular FHA financing.

Who says FHASecure was specifically designed ONLY for troubled borrowers with toxic loans?

HUD.

Just look at what HUD has to say in its own FHA Annual Management Report Fiscal Year for 2007.

“FHASecure Program. This temporary FHA program will provide refinancing
opportunities to homeowners for various types of adjustable rate mortgages (ARMs). FHASecure is designed to increase liquidity in the mortgage market and help people who have good credit, but who have not made all of their payments on time because of rising mortgage payments due to ARMs that have “reset”. This program will provide homeowners an option to help make their payments and keep their homes.”

The FHASecure program is now half of a good idea — the more-liberal mortgage standards. To make the program work HUD has to fix the program so that related credit dings can be ignored — and then maybe HUD will be able to justify claims of value and success for the program.

No wonder demand for FHA mortgages is soaring — who could possibly want a toxic loan? Folks have finally figured out that teaser rates, negative amortization and prepayment penalties are a trap, too often the first step toward foreclosure and bankruptcy.
Final figures from Realtytrac.com are in and the results should appall everyone: There were 2.2 million foreclosure filings last […] read more

The Federal Reserve has decided to reduce both the federal funds rate and the discount rate by a half percent. The effect of this action is to reduce the cost banks incur when they borrow money, a discount which hopefully will be passed on to the public.
The complete Fed statement is below:
Release Date: January 30, […] read more

For weeks we have been disclosing the difference between what HUD has claimed regarding the FHASecure program. In essence, the FHA mortgage program was originally sold as a way to help delinquent conventional borrowers. While HUD says that “In only the first 4 months of FHASecure, more than 40,000 households have refinanced under the new […] read more

U.S. News & World Report has a good interview with Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, regarding the proposed financial stimulus package. Frank discusses a number of issues, including the FHA mortgage program.
It should be said that Frank represents the high-cost Boston area — an area with very high home […] read more

What can you do about the oncoming recession?
If you don’t have one, consider a fixed-rate mortgage. The FHA mortgage program is terrific, but there are equally good conventional fixed-rate loan programs out there. As is always the case, you have to shop around and speak with lenders to get the best deal.
Oh, about the recession.
While […] read more

Can you imagine if the FHA mortgage limit is increased from $362,790 to $635,100? It could actually happen in the next few weeks.
Rumors are swirling around Capitol Hill that the House will raise the conventional loan limit under a stimulus bill from the current $417,000 ceiling to $625,000 or even $730,000 in high-cost areas.
No one […] read more

You have to read past a lot of stuff to get to it, but according to the National Association of Realtors existing home prices fell 1.8 percent during the past year while unit sales dropped 12.8 percent.
Given rising FHA mortgage originations and slowing home sales, it’s clear that the FHA program is gaining marketshare. […] read more

Amid all the hubbub on Wall Street, home mortgage interest rates are falling through the floor. Freddie Mac says that rates for 30-year fixed rate loans reached 5.69 percent with .5 points.
With FHA mortgages, your cost basis will be the interest rate plus that pesky .5 percent monthly insurance premium. Even so, rates are […] read more

Over at Blown Mortgage, one of our favorite blogs, Michael explains how Wall Street operators have lost billions of dollars buying mortgage securities. The answer? Leverage.
FHA mortgages remain hot, however, as Michael explains: “The good news is we’re back to a conforming and FHA/VA mortgage market.”
You can understand that in the chase for maximized profits […] read more

Carrie says she faces foreclosure. Would an FHA mortgage help?
“I am affected by the foreclosure problem in Massachusetts and have gone through a finance application with my lender who has done absolutely nothing to help me with my finance problem.
“I have been trying to locate the The program Mr. Bush put in effect to help […] read more

According to HUD’s own mortgagee letter, the basic FHA mortgage instruction it provides to lenders, the purpose of the FHASecure program could not be more clear.
*”This mortgagee letter describes how lenders and homeowners may refinance mortgages that, due to the increased mortgage payment following the reset, have become delinquent.”
*”This mortgagee letter extends eligibility to borrowers […] read more

Someone asked why the mutating HUD definition of the FHASecure loan program is such a big deal. Is it just a few loud people creating an artificial issue about FHA mortgages?
Nope.
The FHASecure program started out as a way to help people with delinquent conventional loans avoid foreclosure. This is keenly important because thousands of people […] read more

Over at FHALoanAdvice.com, Carl Pruitt — a 21-year veteran of the mortgage and real estate industries — has this to say about the FHASecure program and FHA mortgages in general:
“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 […] read more

Because this site has grown so remarkably in just a few months we have been asked if it is possible for others to become contributors.
If you have experience with FHA mortgages, the FHASecure program and related subjects — and if you can write with reason, facts and links — then we would surely like to […] read more

The good folks at HUD, in an effort to change reality, now claim that FHASecure isn’t a program to help borrowers facing foreclosure after all. It seems, says HUD, that there has been much “confusion” over the FHA mortgage program announced by President Bush on August 31st.
FHASecure Frequently Asked Questions for Housing Industry
IMPORTANT DISCLAIMER
“These FAQs […] read more

With Congress back in session the matter of FHA mortgage reform remains outstanding.
When we last left off, the House had passed HR 3915 while the Senate had approved S. 2338
Given that both houses of Congress have passed reform measures, it might seem as though we only need a short conference meeting to get a final […] read more

Lora B asks “I was just wondering if there is a way to apply for an FHA loan for your house if it has already been foreclosed on?”
The answer likely depends on your jurisdiction. If you have received foreclosure papers there are several steps to take immediately:
First, contact an attorney. You may have important rights […] read more

HUD has some new numbers for FHA mortgage production during the last two weeks of December, the period from December 16th through December 31st:
“During this period,” says HUD, “25,234 mortgages were insured — 21,300 forward mortgages and 3,934 HECM’s. It is interesting to note that 71 percent of the forward mortgages were handled with Lender […] read more

If you’re wondering why the alleged “subprime” meltdown has caused such widespread havoc, consider today’s statement in Washington by Federal Reserve Chairman Ben Bernanke.
Bernanke says investor confidence was damaged by high levels of subprime foreclosures, but you have to wonder: If subprime defaults are such a minor manner, is not investor confidence curiously out-of-touch with […] read more