The Truth and Nearly The Whole Truth
February 13th, 2008
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Speaking at the introduction of Project Lifeline, the new foreclosure prevention effort, HUD Secretary Alphonso Jackson has this to say about FHA mortgages:
“Several recent efforts have been extremely helpful, including the President’s actions with FHASecure. Since September, when President Bush announced FHASecure, the department has received applications to refinance more than 228,000 conventional loans into safe, affordable FHA products. More than 5,000 of these families were already in default and facing foreclosure on their subprime loans. Fourteen hundred lenders have used FHASecure to help struggling homeowners. With the passage of the President’s Economic Stimulus Package, they can help thousands more families because of the increase in FHA loan limits in high cost areas. And if Congress approves bipartisan legislation to modernize the FHA, we could help 250,000 more families. Finally, just last week HUD started sending out letters to more than 850,000 targeted homeowners, urging them to consider refinancing high cost subprime loans with FHA.”
Fawning reports have generally picked up the big numbers — the “850,000″ and the “250,000″ and as a result have missed the central point: The FHASecure program is supposed to be about those “families already in default and facing foreclosure.”
Notice that Sec. Jackson does NOT say more than 5,000 homeowners facing default were refinanced. Instead, he says that more than 5,000 applications were received. That’s not a large number of applications given the huge size of the foreclosure problem — and a large percentage of those applications have obviously not resulted in the origination of new FHA mortgages.
HUD now reports that during the period from January 16th through January 31st it refinanced 17,949 conventions mortgages. Of this number, “3,511 were prior FHA’s, 14,197 were conventional to FHA transactions and 241 were formally delinquent conventional mortgages insured by FHA.”
That’s it. A total of 241 delinquent conventional borrowers who were able to refinance with an FHA mortgage in the last two weeks of January. (For the entire month of January 412 delinquent conventional borrowers were able to refinance with an FHA loan.)
Meanwhile, the latest foreclosure numbers from RealtyTrac.com look like this: In 2007 there were 2,203,295 foreclosure filings — that’s up 79 percent over 2006.
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Listen to FHA Loan Pros columnist Peter Miller on American Public Radio: 
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February 15th, 2008 at 11:42 am
Peter this is scary stuff. Who are we helping? If what you say is true, these programs appear largely ineffective and nothing is stemming the tide. At this rate 5000 people will receive help out of 2.2M?
WOW.
http://www.walidmrealtor.com
February 16th, 2008 at 7:19 pm
Alas, it doesn’t matter how much spin is applied, the shortage of FHA conversions for delinquent conventional borrowers is remarkable.
February 17th, 2008 at 6:08 pm
The modernization of the FHA cannot come to soon. If HUD would only recognize the value that mortgage brokers bring to the market in place of erecting barriers, brokers would be able to help millions of homeowners. As things are, most brokers won’t or can’t meet the requirements to originate FHA loans. So HUD has this gigantic (albeit smaller than a year ago) salesforce at the ready to assist desperate homeowners yet they refuse to avail themselves to it. Sad.