FHA Mortgage Guide

Cat writes and asks: “My home that is in danger of foreclosure due to an adjusted ARM that just happened raising my payment 218.00 more per month. The home is a rental property in Ohio, and I live in TN now. Can I get help with an FHA Secure on a rented property?”

Nope. Not a chance. While the federal government can cough up hundreds of billions of dollars in guarantees and soft loans on a moment’s notice for investors on Wall Street, the general idea is that small real estate investors should not be helped because — oh dear — they’re speculators.

“The government,” says President Bush, “has got a role to play — but it is limited. A federal bailout of lenders would only encourage a recurrence of the problem. It’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.”

“FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates,” said FHA Commissioner Brian Montgomery. “These homeowners, many of whom are minorities, need a safe, affordable mortgage product that will help build wealth.”

Such thinking — such as it is - is foolish.

Imagine that you have a home on the corner that’s foreclosed. Buyers look at the comps for your neighborhood and see that prices are down because of the corner foreclosure and others. Do they care that a foreclosed property was owned by a “family” or an investor? Nope. They don’t care. They only care that the comps are full of recent sales at low prices.

Seen the other way, we need to reduce the inventory of foreclosed homes. Does it matter if the buyer is a “speculator” or an owner-occupant? The important point is to get excess properties off the market, otherwise there’s no hope of maintaining home values.

George Santayana defined “fanaticism” as when you redouble your efforts and forget your purpose. Sound familiar?

Check out these FHA resources for more information

This entry was posted on Tuesday, April 22nd, 2008 at 12:09 am and is filed under FHA. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.