FHA Mortgage Guide

The news is filled with failing-bank stories just about every day, reason enough for me to write about two banks with ridiculously-low foreclosure rates: Hudson City Bancorp and ING Direct. (For the whole story, go to No Mortgage Meltdown For These Banks.)

Hudson and ING prove that “everybody” didn’t offer option ARMs or qualify borrowers with stated-income loan applications. Instead, these two lenders — and no doubt others — stuck to their underwriting standards and as a result are not on anyone’s list of troubled banks.

read more

Okay, here’s the problem. You want to buy a home but already own one. With markets slowing house #1 does not seem likely to sell so you decide to rent it out to avoid the problem of two mortgage payments.

Not a bad idea — I’ve done it myself. In a rising market such an approach can be attractive while in a down market such a strategy could well be a necessity as homes linger on the marketplace for months and months.

read more

It was just a few weeks ago when the big issue in Washington was whether to spend as much as $4 billion to save 400,000 families from foreclosure. That was the potential cost to the U.S. government under the FHA reform bill.

You remember, it was a matter of principle. If we bailed out hundreds of thousands of people across the country we would be creating a “moral hazard.” In other words, if we allowed people to fail we could be pretty sure they wouldn’t do it again.

read more

The ban on downpayment assistance for FHA mortgage borrowers is set to begin October 1st, but there are rumblings on Capitol Hill that maybe an outright blockade is not the right way to go.

When last we had left off with downpayment assistance programs (DAPs) they have been prohibited as of October 1st under the FHA Reform package passed during the summer. To get that bill passed a threatened veto from President Bush, congressional Democrats had to offer various carrots to Republicans in the House and Senate. One of those carrots was a ban on downpayment assistance from third-parties for FHA loans.

read more