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Welcome to FHA Mortgage Guide. We take long-term mortgages for granted today, but it wasn't always that way. Long ago it was likely that if you financed a home you borrowed money with a five-year "term" mortgage -- and even then you needed 50 percent down. FHA's have changed dramatically, learn why! Not affiliated with or owned, operated or sponsored by HUD.gov

HUD Announces Higher FHA Limits

by Peter G. Miller
March 6th, 2008

Below please find HUD’s announcement regarding higher FHA mortgage loan limits, information released just minutes ago.

Beginning today, HUD will offer temporary FHA loan limits that will range from $271,050 to $729,750. Overall, the change in loan limits will help provide economic stability to America’s communities and give nearly 240,000 additional homeowners and homebuyers a safer, more affordable mortgage alternative. The maximum amount of $729,750 will only be applicable to extremely high-cost metropolitan areas such as: New York, Los Angeles, San Francisco and Washington, D.C.

“Many families all over the U.S. will benefit from this access to credit, and increasing these loan limits will inject much-needed liquidity into the housing market,” said FHA Commissioner/Assistant Secretary for Housing Brian Montgomery. “Even moderate-cost states like those in the South and Southwest such as Dallas, Houston, Augusta and Tallahassee will be helped, with most loan limits there rising to $271,050.”

There are 75 areas in the U.S., out of a total of approximately 3200, that will be eligible for the highest loan limit of $729,750. Previously, FHA’s loan limits in these very high-cost areas were capped at $362,790.

The Economic Stimulus Act of 2008 permits FHA to insure loans on amounts up to 125 percent of the area median house price, when that amount is between the national minimum ($271,050) and maximum ($729,750). The new minimum and maximum loan limits are based on 65 percent and 175 percent of the conforming loan limits for Government-Sponsored Enterprises in 2008, which is $417,000. The FHA used a combination of existing government data sets and available commercial information to determine the median sales price for each area, and released the data approximately two weeks after the President signed the stimulus bill. The change in loan limits are applicable to all FHA-insured mortgage loans endorsed after HUD publishes the increased loan limits today, and it lasts until December 31, 2008.

By increasing loan limits nationwide, FHA will provide much needed liquidity and stability to housing markets across the country. Already, as conventional sources of mortgage credit have been contracting, FHA has been filling the void. From September to December 2007, FHA facilitated more than $38 billion of much-needed mortgage activity in the housing market, more than $15 billion of which was through FHASecure, FHA’s refinancing product. By focusing on 30-year fixed rate mortgages, FHA helps homeowners avoid and escape the risks associated exotic subprime mortgage products, which have resulted in rising default and foreclosure rates.

In January 2009, FHA’s maximum loan limit will return to $362,790, unless the U.S. Congress approves bipartisan legislation to permanently increase loan limits as part of the FHA Modernization bill, which is still awaiting final approval on Capitol Hill.

“In January 2009 the loan limits will return to their previous setting,” Jackson will say later today. “We need a more permanent solution. So our next step must be to modernize the 74-year-old FHA. Two years ago, before the downturn, we introduced an FHA modernization bill to Congress. Our plan offers flexible downpayment requirements and higher loan limits. It would also enable the FHA to fairly price premiums, taking risk into account so the market makes rational decisions. We don’t want anyone caught by surprise again. FHA modernization could help a quarter of a million families this year alone. It passed the House and Senate in overwhelmingly bipartisan fashion. But a final bill has yet to reach the President. Congress must act-now!”

Jackson will note that the Administration could not wait for Congress to act. “Last August, the President and I introduced FHASecure. It helps responsible families who, having paid their bills on-time under the original interest rate, find themselves falling behind under the reset rate. For the first time, these delinquent families would be able to qualify for an FHA loan. ‘Underwater’ borrowers and those in the process of foreclosure may also qualify.” Since August, FHA has helped 110,000 homeowners who were current or past due on their loans refinance with an additional 200,000 expected by year’s end.

Jackson will also discuss the Administration’s efforts with the Hope Now Alliance, and industry-led effort that has been reaching out to borrowers in trouble. Hope Now members have contacted over a half million homeowners. Their hotline now receives more than 4,500 calls a day. Industry has modified 1 million loans since the second half of last year, keeping homeowners in their homes.

“We can create the conditions for recovery,” Jackson will say. “We can make the boom-bust cycle shorter and shallower. We can replace gimmicks and shortcuts with transparency and honesty. And we can take the necessary steps to prevent foreclosure.
That’s right, foreclosure is not inevitable, it’s preventable. And we have the tools to prevent it.”

Discussing recent efforts in Congress to bail out lenders, which the Administration opposes, Jackson will note that “Americans are a fair people. They want to help. But they understand that the answer to an economic challenge must ultimately come from the people who drive the economy. They want the tools of recovery in their own hands. And they do not want to kill the spirit of opportunity that made this country great.”

FHA loan limits are based on the county in which the property is located. However, for properties located in metropolitan or micropolitan statistical areas, the limit is set at that of the county with the highest limit within the metropolitan or micropolitan area.

The new temporary FHA loan limits are posted on the HUD website: https://entp.hud.gov/idapp/html/hicostlook.cfm and www.fha.gov. Additional details on these loans are also posted on the HUD website:

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/08-06ml.doc.

How Best To Fight Recession

by Tyler Belong
March 5th, 2008

Can Lender-Initiated Programs and FHA Reform Stave-Off the “R” Word?
To date, the current administration’s plan of attack for correcting the mortgage meltdown and credit crunch crises has been to: (1) place pressure on lenders to help borrowers refinance or setup affordable payment plans and (2) initiate programs and approve legislation (such as FHA Secure and […] read more

Higher FHA Mortgage For California Start Tomorrow, March 6th

by Peter G. Miller
March 5th, 2008

Speaking in California, HUD Sec. Alphonso Jackson has announced higher loan limits beginning tomorrow, March 6th, for California. As well, says a news release issued by HUD with the hour, “new limits for the entire nation will be announced tomorrow
“Beginning tomorrow, HUD will offer temporary FHA loan limits that will range from $271,050 […] read more

Who Gets The Goodies?

by Peter G. Miller
March 4th, 2008

The idea of rising loan limits has real consequences for buyers, sellers and lenders. If someone is at the cusp of the old limits and can finance under the new standards they can save thousands of dollars over the life of the loan. For FHA borrowers, the increase in the top FHA mortgage amount from […] read more

The Way It Used To Be

by Peter G. Miller
March 4th, 2008

The New York Times had a nice article over the weekend regarding Sears kit homes. These were houses you could buy from a catalog. You’d place your order and then a kit would show up ready for assembly. Between 1908 and 1940, says the article, more than 100,000 kit homes were sold.
The part in the […] read more

Should We Federalize Loan Originations?

by Peter G. Miller
March 3rd, 2008

Loretta asks if she can “get an FHA loan direct from government without a mortgage broker if so how?”
The answer is no, but the idea of the getting FHA mortgages directly from the government is not a thought which is outside the realm of possibility.
The current system is set up to assure employment in the […] read more

While You’re Profit-Taking, Help Yourself To An Affordability Product

by Peter G. Miller
February 29th, 2008

Affordability Products?
You have to give the lending industry credit. When it comes to double talk, these folks would elate George Orwell.
“As home prices rose,” says FDIC Chairman Sheila C. Bair, “one way to keep the monthly payment in check, for a while anyway, was to take on an interest-only or payment-option mortgage. These so-called ‘affordability […] read more

Official Report Shows Widespread Home Price Declines

by Peter G. Miller
February 28th, 2008

One of the largest home value studies is conducted regularly by the Office of Federal Housing Enterprise Oversight (OFHEO), the entity that oversees Fannie Mae and Freddie Mac.
Below are the results for the fourth quarter of 2007. For those who believe that the current housing mess is a by-product of “negative reporting,” the release below […] read more

Will FHA Reform Create More “Exotic” Mortgages?

by Jeffrey Hogue
February 27th, 2008

Congress has still not approved legislation regarding FHA reform submitted by President Bush to Congress over two years ago. Given the length of time, and the dire need for reform in a turbulent real estate market, in a letter to Congress HUD Secretary Alphonso Jackson outlined certain provisions that he believes will better serve the […] read more

Rates Soar: Inflation On The Horizon?

by Peter G. Miller
February 26th, 2008

Interest rates last week took a sudden jump, news which is not helpful for borrowers, those refinancing or owners selling a home.
Why is this happening? Two thoughts: First, investors are not thrilled by the expanded 2008 loan limits for FHA mortgages and conventional loans. Second, the whiff of inflation worries contained in testimony from […] read more

The Mortgage Crunch: A View From Washington

by Peter G. Miller
February 25th, 2008

The speech below was given by FDIC Chairman Sheila C. Bair before the Joint Venture Silicon Valley Network in San Jose last Friday. There is a lot of interesting analysis in this speech, something worth reading. (I have highlighted interesting points in bold.
———————–
It is truly a sign of unusual economic times when a group of […] read more

FHASecure To Be Revised?

by Peter G. Miller
February 22nd, 2008

An excellent site, Financial-Planning.com is reporting that HUD has begun to rethink the FHASecure mortgage program.
The program has certainly had vast claims of success. Speaking in Florida earlier this month, HUD Secretary Alphonso Jackson said “FHASecure, which refinances mortgages that are current or past due, has been able to assist over 76,000 Americans since last […] read more

It’s Hard To Turn Down Business, But….

by Peter G. Miller
February 21st, 2008

A loan officer named JJ has posted with us and made a complex point that includes FHA mortgages and all forms of real estate lending.
“Simply put if you can’t afford a house on a regular 30 fully amortized term don’t buy it,” says JJ. “And if you’re a good LO (loan officer) you should explain […] read more

What Is “Fraud for Profit”?

by Peter G. Miller
February 20th, 2008

Testifying before the Senate’s Special Committee on Aging, attorney Rachel Dollar, a representative speaking for the Mortgage Bankers Association, made an interesting point:
“Fraud in the mortgage context can be divided into two broad categories: “fraud for property or housing” and “fraud for profit.” Fraud for property occurs, typically, when fraud is committed so that […] read more

Read All About It — If You Can

by Peter G. Miller
February 19th, 2008

One of the great debates of our time concerns the matter of who is “responsible” for the mortgage meltdown. Some blame lenders and “Wall Street,” some blame borrowers and some blame regulators. (I’m in the camp which says there’s a lot of blame to go around….)
Happily with FHA mortgages borrowers have a generally-good idea of […] read more

Are We Under-Pricing Mortgage Risk?

by Peter G. Miller
February 17th, 2008

Speaking in Washington last week, Edward Lazear, Chairman of the President’s Council of Economic Advisers offered some interesting comments.
“This year’s most significant economic events revolved around housing and credit markets. An apparent under-pricing of risk was revealed first in mortgage markets, and later in a variety of credit markets. The President was quick to respond […] read more

Fun With Numbers

by Peter G. Miller
February 15th, 2008

Speaking before the Senate Committee on Banking, Housing and Urban Affairs, Treasury Secretary told the assembled salons that “the HOPE NOW effort is making progress.
“According to updated statistics, in the second half of 2007 the industry assisted 869,000 homeowners, including 545,000 subprime borrowers who received loan modifications and repayment plans. The progress rate is accelerating; […] read more

Sen. Voinovich — HUD Too Tough

by Peter G. Miller
February 14th, 2008

The Toledo Blade quotes Sen. George Voinovich (R-OH) as saying that “one of the reasons why so many people went to subprime is because FHA wasn’t doing their job.”
“FHA’s requirements were so stringent,” Voinovich told the paper. People “said they were leaving and these vultures knew that was the problem.”
The senator has reason to be […] read more

The Truth and Nearly The Whole Truth

by Peter G. Miller
February 13th, 2008

Speaking at the introduction of Project Lifeline, the new foreclosure prevention effort, HUD Secretary Alphonso Jackson has this to say about FHA mortgages:
“Several recent efforts have been extremely helpful, including the President’s actions with FHASecure. Since September, when President Bush announced FHASecure, the department has received applications to refinance more than 228,000 conventional loans into safe, affordable FHA products. […] read more

HUD To Congress: We Want More — And Less

by Peter G. Miller
February 12th, 2008

HUD has sent a letter to Capitol Hill once again seeking FHA mortgage “reform.”
Under the stimulus program just passed by Congress, the FHA loan limit has been raised from $362,790 to as much as $729,750 — but only for this year. HUD is now seeking to increase the limit on a permanent basis to increase […] read more