Peter G. Miller
May 25th, 2009
With the signing of the Helping Families Save Their Homes Act is it now possible that the FHA’s Hope for Homeowners program will come to life?
The original HOPE program was intended to help people facing foreclosure by refinancing homes with lower-cost loans. That’s sounds great, but to get such new
mortgages it was first necessary to have lenders accept a partial pay-off of their original loan, not much of an incentive.
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Peter G. Miller
May 18th, 2009
For several years there has been a big battle in Washington regarding the way in which new homes are financed. Basically, builders often give “incentives” if only you will use their lender. Their lender, of course, is unlikely to be the world’s cheapest source of financing, thus you may get upfront benefits but may also pay extra over time.
HUD tried to stop the practice with a new rule banned the “required use” of the builder’s mortgage lender, was promptly sued by the home building industry and has now withdrawn its proposal altogether, meaning that new home buyers will continue to have the opportunity to pay more than they should for real estate financing.
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Peter G. Miller
May 11th, 2009
It’s time to dump FHA’s Hope for Homeowners program.
The plan was launched last October with high hopes but little sense. The idea was to refinance troubled mortgages with FHA loans, but to participate borrowers had to obtain huge and costly concessions from lenders. Lenders, as you might guess, were not thrilled with the idea and the result was a virtual nationwide boycott of the program. HUD reports that as of April 15th it has received 888 H4H applications — and approved just one.
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Peter G. Miller
May 4th, 2009
If you want to get an FHA mortgage then you have to get an FHA appraisal done by an actual human who goes inside the property.
Making sure that a property exists and is in good shape may not seem like much of a standard, but of course our friends in the world of private banking have been working diligently to assure that full appraisals are not required. Why? Appraisals cost money and money paid to properly underwrite a loan is money that could otherwise been used to increase lender profits and executive bonuses.
Substitute Appraisals
Lenders have tried over the years to substitute appraisals with broker price opinions and automated appraisals. In the first case a real estate broker estimates the value of the property, not a bad option in many cases because a good broker can typically give a pretty good valuation. The problem, though, is that brokers are paid to buy and sell homes. There is an inherent conflict in their valuations, no matter how good. If I am a buyer I certainly do not want to rely on the seller’s broker for pricing advice and if I’m an owner I don’t care too much what a buyer broker thinks.
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