Peter G. Miller
April 27th, 2009
In the world of federal rules and regulations the accounting year begins October 1st. This means that for the FHA half the year ended March 31st, a good marker to see program results to date.
Results
As of the end of March, the FHA had:
___ 1,405,620 mortgage applications — that’s 84.4 percent higher than the 762,266 loan applications made during the first six months of fiscal 2008.
___ 867,716 approved loans — that’s more than double the 2008 total of 406,833 to this point, an increase of 113.3 percent.
___ 85,548 reverse mortgage applications — a figure up 16.1 percent from 2008 for what HUD calls home equity conversion mortgages, HECMs
___ 57,856 reverse mortgage approvals. That’s up just 4.8 percent over last year.
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Peter G. Miller
April 20th, 2009
Many years ago I ran into someone who did mortgage audits — that means he went through monthly statements in an effort to find out if the lender actually was charging the right interest rate and credit payments properly. He charged a reasonable fee for his services and sometimes found errors that meant thousands of dollars in loan reductions for borrowers.
I bring this up for several reasons.
FHA Loan Basics
First, if you have an FHA mortgage the odds are overwhelming that your account is being properly credited. Why? Because FHA loans come in two basic flavors, fixed and adjustable. Payments for fixed-rate loans are always the same monthly total for principal and interest, you just have to see that the interest level is declining each month while the principal balance is rising.
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Peter G. Miller
April 13th, 2009
It’s called Mortgagee Letter 2009-12, still another note from HUD explaining how FHA loans are to be originated and administered. Usually these letter are astonishingly dull, but this one is a gem. Why? Because HUD is bringing back its SWAT team.
Now you might think, huh? HUD has a SWAT team? Well, actually it used to and now it does again.
Just Checking….
To put this as nicely as possible, HUD obviously thinks that some lenders have not quite lived up to the usual standards of FHA underwriting. That’s a problem because loans that don’t meet FHA standards to the letter are likely to be the very loans which cause FHA losses. So, to combat this problem, HUD says that it “continues to introduce proactive measures to appropriately manage its risk. Recently, FHA reactivated its Special Work Assessment Teams (SWAT) to conduct single-focus on-site reviews of lenders whose originations are exhibiting signs of distress.”
Translation? HUD is going to start once-again to audit FHA lenders to make sure they’re delivering loans that meet government standards.
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Peter G. Miller
April 6th, 2009
There are a lot of people out there who just hate FHA loans. What bothers them is the idea that the federal government has been competing with private lenders since 1934. It’s socialism, they scream. And look at how lousy the government is doing — have you noticed that FHA defaults are soaring, they ask?
For some, of course, the real issue is a little different. The government has helped many entry-level borrowers gain home ownership through the FHA program and that’s an affront to those who believe that if you can’t get a downpayment gift from Dad that you have no right to buy a house.
The idea seems to be that the FHA should be held to a perfect standard while lenders in the private-sector should not. After all, if we had an honest accounting of the damage done during the past few years by “affordability” loan products, stated-income mortgage applications and underwriting standards which were apparently non-existent then a lot of folks would spending time in the Madoff suite at some nearby federal jail.
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