Posted by admin | Under FHA Mortgage
Tuesday Jan 20, 2009
On January 19, Scott Syphax of the Nehemiah Foundation announced that Congressman Al Green has introduced HR 600, a bill to restore seller assisted down payment programs to the FHA loan universe. Here is a link to the press release. I haven’t seen the final bill. It seems to be a “lite” version of H.R .6694 introduced in the last Congress. It reintroduces tiered mortgage insurance premiums, often referred to as ‘risk based mortgage insurance premiums” although this bill does not seem to refer to them that way.
I guess the perfect evidence that this is the same bill is the fact that Nehemiah issued a press release on January 20, 2009 stating that:
According to Nehemiah Corporation of America, the Congressional Budget Office (CBO) confirms that FHA Seller-Financed Downpayment Reform Act of 2009 (H.R. 600) is similar to the previous DPA Bill (H.R. 6694) in that it would not cost the federal government any money for the next five years. This is due largely to the self-funding mechanism that sets premiums based on an individual’s credit scores.
Also according to the press release:
Creating opportunities for homeownership will be the cornerstone to strengthening a crumbling housing market and breathing life back into the economy,” said Mr. Syphax. “With credit scarce and homeownership harder to achieve than ever, the consequences of removing a program that created 50,000 homeowners a month is unfathomable and will likely further devastate the housing market, not to mention communities across the country that have come to rely on these programs. Congress must ensure that the pending bailout of Wall Street does not undercut the important role that consumers play in any economic recovery, not to mention the liquidity programs like downpayment assistance provide at no cost to taxpayers.
It’s for times like these that the government initiated the Federal Housing Association during the New Deal, and its role is as germane now as it ever was,” continued Mr. Syphax. “Washington needs to follow H.R. 600’s lead and see what is so plainly obvious to the CBO. DPA can provide the liquidity and access to homeownership needed to push billions of otherwise lost dollars into the housing market and won’t cost taxpayers, Treasury or the U.S. government a thing. Language is already drafted through a bi-partisan Bill and it has been vetted by the CBO. Now Congress just needs to use it!
I have discussed seller assisted down payment programs at length elsewhere on this site, so I won’t burden you again with a full analysis right now. I know that as prices were going up, I helped many, many people become homeowners using this program. It has been a good thing for those people I personally know. On the other hand, making homes easier to buy with very little sacrifice and preparation, using this program as well as others, contributed to the housing bubble that we are experiencing now. There may be other, more effective methods which can be developed to help people buy up the homes sitting on the market now. Methods which contribute more toward a housing system with a strong foundation which doesn’t experience these bubbles and crashes.
Regardless, whether you support or oppose seller assisted down payment programs, the time has arrived to start paying attention again.
Posted by admin | Under FHA Mortgage
Thursday Jan 15, 2009
Consumers, please listen closely. If you are still holding out hope that a new FHA program is going to save you from foreclosure, then RUN. Do not walk. Find another option before it is too late. Loan officers, stop trying to drum up business for a useless program that had no chance from the start, and then disappointing your borrowers who are already having a bad enough time of it.
In a December 17th Washington Post article, HUD Secretary Steve Preston declares the Hope for Homeowners program a failure. He places the blame on Congress for attempting to micromanage the program in the legislation instead of letting HUD iron out the details. The article also confirms what many have been saying – only 312 people have been helped by the program since it officially started at the beginning of October. The article quotes Secretary Preston
“What most people don’t understand is that this program was designed to the detail by Congress,” Preston said. “Congress dotted the i’s and crossed the t’s for us, and unfortunately it has made this program tough to use.”
FHA Commissioner Brian Montgomery was literally vocally attacked by lenders, housing counselors and real estate agents at a Hope For Homeowners training session in Atlanta. According to the article he described it as a “rock throwing session”. I’m not really sure what they expected. I guess Mr. Montgomery was obligated by his position to show up and at least try to explain the program.
The program was put into place filled with compromises that made it hopeless and impossible from the beginning. Anyone with an IQ above room temperature could see it, but it seemed to slip by Congress as they all rushed to take credit for saving 400,00 homeowners from foreclosure. The requirements almost seemed to be designed to be impossible to meet and the resulting loan essentially caused it to make more sense for borrowers to just walk away from the home than accept the terms.
To quote the Washington Post article again:
“You’re paying a premium to borrow the money already, and that ought to be enough,” said John Taylor, chief executive of the National Community Reinvestment Coalition “To me this falls into the category of, we want your firstborn.”
Of course, official Congressional buffoon Barney Frank – one of the top cheerleaders behind almost every wrong turn taken getting into this mortgage mess – blames the problems on FHA. Frank makes the case that certain elements of the Hope for Homeowners program had to placed there to make the program palatable to the American public. For instance, the requirement that any equity from selling the home must be split with the government. Quoting the article again,
“You’re not going to get a program approved that helps people refinance loans on their homes and then allows them to turn around the following year and make a profit on that home,” Frank said.
I don’t know what dream world he is living in where real estate values are going to go up that much by next year, but the first question that comes to my mind is: What is the government giving these people that is worth signing away any future equity? The answer is nothing. The lenders (or more specifically, the individuals, retirement funds and money market/mutual funds who own mortgage bonds) are being asked to take a loss, not the government.
Why not simply allow the lender to keep a lien on the property for the remaining amount of the mortgage which can’t be paid off right now. There was never any reason to filter the money through the government. Why not create some procedure similar to an FHA streamline refinance where people who have been making their payments on time for a set period of time could refinance as long as their payment wasn’t going down. Why such a rush to bail out Wall Street with a blank check, when no one is willing to give a similar break to homeowners who made a mistake.
Who knows. Maybe the powers that be will get the program fixed. Past experience doesn’t support that opinion though. If you are a homeowner in trouble, find out what you need to do to get a loan modification. Don’t keep waiting on an FHA program until it’s too late.
Posted by admin | Under FHA Mortgage
Saturday Jan 10, 2009
It always seems there is another shoe about to drop on the mortgage business these days. Now that rates are so low we are having another refinance boom, it turns out that lenders may not have enough credit on their warehouse lines to keep their pipelines moving. Now the Mortgage Bankers Association has created a task force to make sure the folks at the Treasury Department know what is going on.
If you are a loan officer working for a net branch lender, or smaller correspondent lender, or a mortgage broker submitting loans to small to medium sized lenders, or even a consumer trying to get a loan – Don’t be surprised to see strange closing delays pop up while your lender tries to come up with enough money to close the loan.
It will be very interesting to see how this situation develops. What happened to the days when all a loan officer had to worry about was learning the guidelines and bringing in business?
Posted by admin | Under FHA Mortgage
Tuesday Jan 6, 2009
This is not an FHA specific guideline update, but it is something that involves bringing in more FHA mortgage business which I think loan originators might be interested in.
Chip Cummings kicked off a SERIOUS mortgage marketing experiment last week!
He calls it the “Mortgage House Experiment”, and he will be helping one of his clients, Tim, with the creation and rollout of a marketing campaign – and YOU CAN WATCH!
They’ll be doing their OWN version of “reality TV”, and letting you watch behind the scenes as he walks you through how to set up an actual real-live running marketing campaign. You will see how leads are generated, prospects are converted, and what the end results are – in real $$$$.
But he can’t do it for free. You have to be a member of the Mortgage Power Network:
It will cost you $3 to watch (and also check out the other resources inside) for the next 14 days, then if you like
it – $49 to continue. Not a bad deal, considering he is looking at generating thousands of dollars in deals for Tim! He’ll show you how to do the same.
Consumers, please listen closely. If you are still holding out hope that a new 
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