Peter G. Miller
July 29th, 2011
There’s been a lot of talk regarding a new federal standard for home loans and how it will impact the marketplace. In these discussions, Federal Housing Authority (FHA) mortgages are frequently mentioned as if they had some sort of disease which is tearing at the heart of the national economy.
The new rules under Wall Street reform create a standard for loans. If a loan fits, it is then a qualified residential mortgage (QRM). If it doesn’t fit, then the lender can still make the loan and a borrower can still be dumb enough to accept such financing.
Lenders, of course, are screaming about the new QRMs. They’re telling everyone who will listen that loans under the QRM will require 20 percent, so be very afraid of the new standard.
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Peter G. Miller
July 18th, 2011
There’s no surprise about this one, a lot of people are unhappy with the new mortgage loan limits set to start Oct. 1, 2011–loan limits which are lower than today’s standards.
“The housing market does not need a self-inflicted wound,” said Rep. Gary Ackerman (D-NY), a co-sponsor with Rep. John Campbell (R-CA) of legislation which would keep today’s loan limits in place. “With the economy remaining fragile and the housing sector still struggling to recover, now is not the time to make the cost of mortgages more expensive.”
Under HR 2508, loan limits for FHA and conventional loans would stay where they are until 2013.
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Peter G. Miller
July 12th, 2011
Unemployment just won’t go away.
The latest numbers point to an “official” unemployment rate of 9.2 percent and paltry jobs growth–just 18,000 new jobs in June.
That’s 14.1 million people without a job, not counting that 2.7 million individuals who were “marginally attached” to the labor force.
Now the FHA has decided to do something useful to help the unemployed. It has established an unemployment forbearance program for those FHA borrowers who have lost their jobs.
This is going to be a good deal for several reasons: First, it will help people with real needs, and second, it will set an example the private sector can follow.
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Peter G. Miller
July 11th, 2011
As we have long predicted, the FHA’s short refi program continues to be dead in the water. Despite a big announcement introducing the program last August, the marketplace reaction has been ho-hum.
Is this fair? Is there anything in the short refi program which might redeem the concept?
The latest numbers from Housing and Urban Development (HUD) tell us that since Oct. 1. a total of 535 applications have been submitted for the program and, of these, just 195 have been approved so far. As of May just 65 applications were in the pipeline, suggesting that very large numbers of applications have fallen through.
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Peter G. Miller
July 8th, 2011
The Federal Housing Authority (FHA) is gradually returning to the comfy loan limits of old.
As of Oct. 1, 2011 FHA guidelines will be changed and maximum loan sizes will be reduced. The term “reduced” should not frighten anyone; available loan amounts will still be far above the financing levels required by most FHA borrowers.
Lowering FHA Loan limits
Under the new rules, the maximum FHA loan size will be reduced from $729,750 to $625,500 in high cost areas in the lower 48 states. As recently as 2006 the comparable FHA loan limit was $362,790.
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Peter G. Miller
July 5th, 2011
The Federal Housing Authority (FHA) is ending the Hope for Homeowners (H4H) program and not too soon.
The essential idea behind the H4H effort was to help underwater homeowners refinance toxic loans into FHA mortgages. Sounds good–at first–but in fact the program was doomed from the day it started in 2008.
To participate in H4H you must have a borrower who needs help and a lender willing to reduce the principal balance of the loan. Since lenders have little interest in reducing principal balances, you can image that few Hope for Homeowner loans were written. As to borrowers, they had to be refinancing a prime residence and could not own a second home or investment property. The borrowers must need help because their loan payments have shot up and represent more than 31 percent of their monthly income.
But the program also contained some unusual provisions.
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