Artificial FHA “News”

by Peter G. Miller
July 30th, 2008

In the realm of non-news, we have various lenders now focusing on the joys of FHA lending and explaining how FHA mortgages are largely unknown to the public — thus the sudden need for the expertise of these lenders. This, of course, is difficult to believe.

The FHA program has been in place since 1934. More than 34 million loans have been issued with FHA backing. The FHA program is about as secretive as pro football on a Sunday.

What’s really going on is that lenders are no longer able to make toxic loans. Option ARMs are out, interest-only financing is rapidly becoming a memory (and not a good one) and stated-income loan applications are now unbelievably rare — whereas before they were just largely unbelievable.

Essentially, the mortgage marketplace has been reduced to three flavors: conventional, FHA or VA. Investors will buy such loans, thus lenders must sell them. Seen the other way, if you want to play lender you can’t sell much else and make money.

We have a growing number of newly-minted FHA specialists, authorities and experts — folks who yesterday were offering piggyback loans and, who knows, maybe even financing with no money down and no payments until next May.

We have also seen the development of a solid community of consumers and lenders on this site during the past year. We have “met” a number of lenders and loan officers online who have solid expertise and years of experience with FHA mortgages.

To those with an interest in financing or refinancing at this time, we say: Simple and plain FHA loans have kept a lot of people out of financial trouble when more alluring mortgage options were available. Talk to loan officers about their FHA activities for the past few years. There are lenders who have been working with FHA mortgages for a long time and really know the ins and outs of the program — and why it continues to be a safe and sensible option for many borrowers.

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This entry was posted on Wednesday, July 30th, 2008 at 3:26 am and is filed under . 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.

2 Responses to “Artificial FHA “News””

  1. marc brinitzer Says:

    You’re absolutely right about this being “non news”. The reason we couldn’t use sensible government loans during the last 8 years here in California was that sellers wouldn’t talk to an FHA or VA buyer (or pay the FHA/VA non- allowables) when they had other buyers qualified with subprime 100% “stated income” loans.

    Now those subprime LOs need access to FHA to survive, but watch out. Most of them have no idea how to put a government loan file together. “What do you mean you need W-2s and pay stubs?” OMG

  2. David Reed Says:

    Very good point, Peter. It’s also not the easiest thing in the world to be approved to originate FHA loans as a mortgage broker, either. If you weren’t FHA approved and there were other loan types available, it’s easy to push someone into an alt or sub prime loan simply because the broker didn’t have access to FHA loans.

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