Posts Tagged ‘fha loan’

Is FHA in Trouble?

Tuesday, September 8th, 2009

Just this morning, I was reading an article that I came across regarding a couple things that are going on with the Federal Housing Administration (FHA)….and it wasn’t pretty.

Basically what’s going on right now is that there are justifiable rumors that the FHA’s reserves (capital) are hovering around dangerous levels.

Congress requires that the magic number FHA needs to be at is 2%. At the moment, its speculated to be down to about 3% (down from 6.5%  in 2007) and if it falls below that mark, Uncle Sam has to come in and save the day once again. (Is it just me, or is this a never-ending cycle? Has anyone seen AIG’s stock quote recently?)

At the moment, FHA’s defaults (90 days+) are nearing 8% and depleting a good portion of FHA’s reserves. While that number may not seem that HUGE, you have to see how all this links together.

Several high-cost areas in the US got hit pretty hard the past couple of years. What goes up, must come down, right?

Well because of those declining markets, FHA decided to increase their loan limits and availability to accommodate the supply/demand in those areas. Who has $140,000 stashed under their mattress in CA to buy that $700,000 home? Not too many people. Well, who has around $25,000? Get the point?

And while this WAS needed to help stimulate buyers, you have to think of what happens on the flip-side. When that $5,000 (est) payment can’t be made anymore, and its time to jump ship, and who gets stuck with the bill? FHA.

FHA then has to tap into their reserves to make good on this.

Think about this for a moment:

In Texas, about 4-5 homes have to foreclose to match that ONE home in California. The odds of 4-5 consumers simultaneously defaulting is not that likely, unless they’re Madoff’s advisors.

The point I’m trying to make is that the high-cost areas are affecting FHA a little bit more than other more stable areas. While I am not saying that FHA lending shouldn’t be available here, I think it would be a good idea (especially now) to implement some more stringent measures before approving every Tom, Dick, and Harry that apply. Last thing we ALL want is to wave bye bye to FHA.

The remainder of the year will be quite interesting. An important incentive is coming to an end ($8k Tax Credit), and as for interest rates, well, let’s just hope they keep steady. Too many good things coming to an end is not a good thing.

Tommy’s 2 Cents

I would safely venture to say that FHA credit score requirements will be going up here in the upcoming months, as well as a larger down payments later down the line. While FHA loans have been the hot product, I wouldn’t be surprised to see Conventional loans start to SLOWLY creep back in and create a “2nd hand FHA loan” if capital continues to diminish as it has.

Remember what happened with Sub-Prime loans? High Demand, High Supply, POOF- they’re gone! History always repeats itself, let’s just hope we’ve learned our lesson the first time, and we don’t screw up FHA, especially for Dawson’s sake.

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Don’t Cheat Home-Buyer’s Tax Credit

Friday, September 4th, 2009

By Kenneth R. Harney

The IRS has an urgent message for would-be home purchasers: Make the most of the $8,000 first-time-buyer tax credit before it disappears Dec. 1 — if you qualify.

But if you don’t truly qualify, don’t try to play games with the credit. The IRS already has 24 criminal investigations of suspected fraud underway around the country. It has executed seven search warrants, and last month a tax preparer in Florida entered a guilty plea on federal charges of fraud in connection with the first-time-buyer credit. He’s awaiting sentencing and faces up to three years in prison, a $250,000 fine or both.

Congress’s two versions of the first-time-buyer credit — a repayable $7,500 credit in 2008, and this year’s more generous $8,000 credit that does not have to be repaid — have stimulated home sales nationwide. But they’ve also become irresistible temptations for dishonest taxpayers to cash in and claim bogus refunds.

Claiming the credit looks so easy: You just fill out IRS form 5405, list the address of the house you bought, mail it in and wait a month or two for your money. Who’s going to check on whether you really qualify under the definition of first-time buyer — someone who hasn’t owned a principal residence in the previous three years — and that you’re eligible on income and other factors?

With thousands of people buying houses and claiming tax credits, who’s going to be able to check all those filings? The answer from the IRS: We are. The agency said it uses “sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit.”

The IRS won’t discuss the nature of its screening, but it’s clear from the number of ongoing investigations that claims for the credit are getting special scrutiny.

In the case of the Florida tax preparer, one tip-off evidently was the sheer number of clients who claimed credits as first-time buyers. James Otto Price III of Jacksonville entered a plea of guilty to charges that he fraudulently submitted returns claiming tax credits for 15 clients, some of whom apparently did not understand what he was doing.

According to a summary of the facts agreed to by Price as part of his plea agreement, he admitted that in February he met with a client who told Price that she didn’t want to buy a house. But Price insisted that she qualified for the credit because “she had two jobs.” He then wrote in a house address on the form 5405, claiming the client closed on the purchase Jan. 5. When she received her $7,500 credit, Price took $1,000 of it for himself.

In the plea agreement, Price admitted following a similar pattern in 14 other tax returns.

IRS spokesman Terry Lemons declined to discuss the ongoing criminal investigations of taxpayers claiming the home-buyer credit. He said the investigations involve individuals as well as tax-return preparers.

The IRS doesn’t “want to discourage people from taking advantage of the credit,” Lemons said, but it wants them to be certain that they’ve read through the eligibility rules so they don’t end up with audits, back taxes and late penalties. On the list of things that can disqualify buyers:

– Purchasing your house from a “related person.” That’s a broad category of people and entities, ranging from immediate family members — a spouse, parents, children, grandparents, grandchildren — to a corporation or partnership in which you have more than a 50 percent ownership stake.

– Buying a home with a spouse who is ineligible, even if you are eligible individually.

– Acquiring a house through an inheritance or gift.

– Financing the house through a tax-exempt mortgage bond program.

– Making too much money — in excess of $95,000 of modified adjusted gross income for singles, $170,000 or more for married joint filers.

What are the downsides if you claim the credit erroneously and do not intentionally defraud the government? If you are audited, the IRS most likely will ask for the full credit amount back, plus interest and a late-payment penalty.

Bottom line: Don’t let this year’s tax credit pass you by if you meet the criteria. And if you don’t, beware of slick-talking professional tax preparers who tell you that you do.

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Come on 7’s! Daddy Needs a New Roof!

Monday, June 15th, 2009

Here’s an excerpt from one of my favorite movies, A Bronx Tale. Please follow closely:

MushSonny: Get this over with, Mush.

Mush: Come on, dice. Baby needs a new pair of shoes. Come on, seven!

Mush: Come on! Come on, dice!

Sonny: I don’t even have to look.

(Spectator) And seven!

Mush: Craps! I’m out!

Sonny: Get him out of here! Man never hit a number in his life!

As we all have been following lately, rates have been pretty damn good. I mean REALLY DAMN GOOD. That was…until a week or so ago.

I was working with one of my clients and highly advised him to lock in his rate at 4.875% on a 30 Year Fixed, however he decided to float instead of paying a “little” bit more for an extra 15 days. Why? Only he knows.

He is now at a 5.75%. (crickets chirping)

Ladies and Gentlemen- DO NOT END UP LIKE EDDIE MUSH (featured above) and crap out in this market!!! I cannot stress to you enough how important it is to secure a good rate in when you see it. I am coming across several people daily that REALISTICALLY expected rates to go down to the high 3’s because the media puts their dirty little paws on it, and in the end, they lose out on something great.

Would you listen to Al Roker talking to you about mortgage rates or me about weather? I really hope not.

The loan officers that are still here (you can tell who the seasoned ones are) are here for a reason. We have flourished through the good, withstood the bad, study the market, subscribe to various sources of mortgage news, and have a pretty good grasp on what’s going on.

Many feel that when the loan officer says “Mrs. Jones, you need to lock in,” it is mostly viewed as a sales pitch to get your commitment rather than advice, and many clients back off.

I mean this is normal. I can understand it and would probably do the same.

Do this. Next time your loan officer does this, ask them “Why should I secure this rate Mr. Mortgage? And don’t tell me rates are going to go up. Explain WHY” and see what they say. If studdering occurs, move on to the next mortgage professional. If they can advise you with detailed information, they’re a keeper!

In the end, it is only YOU that will win…or lose.

Tommy’s 2 cents

DON’T BE GREEDY.

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SubPrime Greed or Governmental Ignorance?

Thursday, January 15th, 2009

I have voluntarily stopped watching news. Seriously.

What can CNN, FOX News, or even your local news tell us that we haven’t seen, or better yet, experienced first hand in this wild real estate market the past year or so?

Absolutely nothing!

If I wanted negativity, I would ask my Uncle Frank how his prostate is holding up.

All we hear is Foreclosure this, Subprime and Predatory Lending that, and geez if I hear the word “Recession” one more time, I’m going to stop what I’m doing, catch the first canoe out, and start a fruitful career as a monk in the West Indies.

Who’s to blame? A LOT of different people in different places.

The main point of this article is to show you why we didn’t even NEED Subprime loans to begin with, and how we could have altogether avoided  a good chunk of the mess we’re digging ourselves out of now by having more skilled, licensed, and knowledgeable mortgage professionals well versed with an FHA loan.

Read closely. I write “skilled, licensed, and knowledgeable.”

Millions of borrowers signed on the dotted line for a Subprime loan when in fact it wasn’t even necessary to qualify in the first place.

Here’s why.

Subprime loans were designed to qualify buyers who didn’t “traditionally” meet the standard criteria to qualify for a mortgage. Usually the ideal candidate had credit that was dinged, late pays on accounts, not a lot of money in the bank, etc.

The main one, in my opinion, was credit score. Believe it or not, I remember you could get a house if you had a 500 score, and the kicker was, you didn’t even need to PROVE income! How ridiculous is that?

So the best way to understand this is put yourself in the shoes of a Realtor, a Loan Officer, the Broker, the Banker, the Appraiser, the Title Company, Wall Street, Investors, Surveyors, Inspectors, so forth and so on.

As you can see, it’s not just a few people that were profiting from these types of loan. Why would somebody mess up a good thing? Everyone was making money!

So my next question is:

If I told you that I had $100 in one hand, but I can hand you $75 right now, what would you tell me?

“Buddy, I’m right here. Fork it over!”

Now if I told you I had $100 in the other hand, but I would agree to give you $10 a month for the next 10 months, what would you tell me then?

“Um, I’ll take option 1… and now please!”

Think about that one.

Anyone can argue that the supply/demand curve in that type of market would not sustain my 2 questions above. It’s just like poker. “Push all in when you have the best hand.”

But that is what got us in trouble.

This brings me to FHA Financing. (This isn’t NEW by the way)

We, as “mortgage professionals”, could of easily taken hand #2, slow and steady, giving our clients BETTER RATES, getting paid MORE COMMISSION, and not giving an Oak tree a $750,000 Stated Mortgage Loan.

Most took hand #1. Most of those folks are now broke, and working at a retail banking center making 20% of what they WERE making back then. Their bills are still the same.

The Federal Housing Administration (FHA) was created by Congress in 1934 when the housing industry was hurting- kind of like how it is now. The main purpose of it was to fuel the “American Dream” as back then, the US was mostly a nation of renters.

So why is it that all these mortgage brokers and bankers were originating Subprime loans this whole time when FHA was available? Was it greed or ignorance?

The answer is BOTH, but mostly IGNORANCE.

During the Subprime days, any Joe Shmoe could graduate from Jack in the Box University (nothing against Jack- I love him), easily get their loan officer’s license, get BEGGED by a mortgage company to start (if you could leave fog residue on a mirror by breathing on it, you were HIRED!), and begin originating loans with absolutely NO experience or training.

The problem was that most of these mortgage brokers weren’t any smarter either!

All the brokers knew was Subprime.

They were letting these people ADVISE CLIENTS ON THEIR BIGGEST DEBT OF THEIR LIFE!!!! Can you believe that?

They sold easy stated income loans that required less work and never did their homework on educating the clients. It was easy money and it was FAST money.

Now, I think if these guys were not ignorant to begin with, their greed would have actually BENEFITED the real estate industry.

How you ask?

Super simple.

Well during the dark age of Subprime lending, a typical Subprime loan would either be on a 30 year fixed or Adjustable Rate Mortgage (ARM) with interest rates ranging from 7.5% to 12%. Of course the higher the rate, the more commission the lender pays to the loan officer. On average, loan officers would make between 1%-2% in commission, but give rates that sucked! An FHA loan on the other hand can pay a mortgage broker/mortgage banker the same if not double what a Subprime loan would pay, except that the rate would be in the 5%-6.25% back then!

Lower payments, less foreclosures, DOCUMENTED income, etc. It wouldn’t SOLVE the crisis, but would have definitely cushioned the real estate fall.

So why didn’t mortgage brokers and bankers originate FHA loans?

1. Because they didn’t know about FHA or didn’t know how to originate them
2. Because most loan officers were self employed contract employees and FHA only allows for W2 employees, or
3. Because their mortgage broker or banker was not licensed to originate FHA loans.

Today’s FHA mortgages are yesterday’s Subprime mortgage. Or is it today’s FHA mortgages SHOULD have been yesterday’s FHA mortgage? With fewer options left these days, people are running in droves to FHA financing, but be careful. LEARN FROM PAST MISTAKES. The exact same can happen with FHA if not regulated properly.

The lesson learned (what I preach): Knowledge goes a long way in this industry.

For buyers reading this article, please make sure that your mortgage representative knows this business! Make sure they are not just another Joe Shmoe trying to make an extra quick buck without truly earning it.

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What the FHA Needs To Get the Job Done

Friday, October 3rd, 2008

In the current credit squeeze, if you have less than a 20 percent down payment, there’s pretty much only one major source of mortgage financing available: the Federal Housing Administration, the Depression-era home loan insurance agency that still offers 3 percent down, 30-year, fixed-rate mortgages with consumer-friendly credit standards, even on jumbo loans in high-cost areas of California and the East Coast.

But there is a potentially troublesome problem looming for the FHA: New loan volume is exploding — tripling in the past 12 months alone — and Congress has handed the agency the responsibility for almost all the government’s efforts to keep economically distressed homeowners out of foreclosure by refinancing their unaffordable loans.

The FHA says it needs to hire more staff and upgrade its technology to be able to handle the crush of new business, but it complains that Congress hasn’t appropriated the necessary funds — $65 million — to do the job fast enough. Capitol Hill appropriations committee staff dispute some of that, but the specifics of the arguments over dollar amounts aren’t the issue.

The real question is this: Can a government agency whose market share dropped below 3 percent during the heyday of the subprime boom now properly handle explosive volume rocketing it to an estimated market share of 30 percent this year? Are both the agency and Congress — which controls the purse strings — up to the task?

Mortgage industry, home building and real estate experts worry about the possible consequences of shifting too heavy a share of the mortgage market too quickly to an agency that may be inadequately staffed or funded. Howard Glaser, who served during the Clinton administration as acting general counsel for HUD, the parent department for the FHA, worries that loading on too much business without properly funding staff and technology upgrades raises the odds of breakdowns.

“FHA is assuming the risks of a mortgage market abandoned by private investors — without the risk management tools,” he said. “My fear is that next year at this time, we will be debating an FHA bailout.”

Steve O’Connor, senior vice president of the Mortgage Bankers Association, agreed there’s danger lurking in the massive increases in business going to the FHA. “You just can’t expect to fit that amount down the same size pipe — you’ve got to expand the size of the pipe” by funding additional staff and technology, he said. “It’s a very serious concern.”

Other industry groups, including the National Association of Home Builders and the National Association of Realtors voice similar worries. Dick Gaylord, president of the Realtors, said “if [the FHA] is truly going to serve its growing constituency,” it will need more money and people.

The FHA — for years the forgotten federally controlled stepchild of an industry dominated by Fannie Mae, Freddie Mac and the Wall Street mortgage bond machines — is now insuring more than 140,000 new loans a month, according to agency statistics. It has $400 billion in outstanding loans in its insurance portfolio and runs its home mortgage business with 937 employees in offices spread around the country. The agency wants authorization to add 160 employees immediately.

Though historically a resource for first-time buyers, minorities and people with imperfect credit, the FHA increasingly is the go-to place for people who have above-average credit backgrounds but lack — or choose not to use — large amounts of down-payment cash. In August, according to agency data, approximately 23 percent of new FHA home purchasers had FICO credit scores above 720 — far beyond the proportion of prior years. In the same month, just 12 percent had FICO scores below 600.

With mortgage limits extending into the jumbo category, the agency is attracting large numbers of customers from high-cost areas of the country, especially California and the mid-Atlantic states. One of 10 new borrowers in August was from California.

To some mortgage lenders and loan officers, the FHA is now the main game in town. “Nothing competes with them,” said Paul Skeens, chief executive of Colonial Mortgage Group in Waldorf.

Fannie Mae and Freddie Mac, both now in federal conservatorship, have steadily added fees to the point where “they just aren’t competing with FHA on down payments or costs,” Skeens said. In 2001 and 2002, Skeens’ firm did just one-quarter of 1 percent of its volume in the FHA. Now it’s 60 percent.

“The last thing we need right now, with the shape the housing market is in,” he said, “is for FHA not to function well.”

By Kenneth R. Harney

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Oh Boy! More FHA Guideline Changes

Thursday, October 2nd, 2008

This is the main reason you NEED to have an FHA EXPERT (such as us of course) working with you.

Can you imagine being 2 weeks into the process and your part-time Loan Officer calling and saying, “Hi Bob… um, we have a little issue?”

In our information age, you need what you want, and you need it NOW- but not so fast, Charlie.

What we see (and later save), day in and day out, is inexperienced Loan Officers wanting to get the “deal” in faster than they can ask your name, only to realize that they forgot to ask you that one “deal-killer” of a question at the beginning, and now everyone is out of time, and money- but has plenty of frustration.

So to ease everyone’s minds, we are here to help and want you to know that we have our fingers on the markets, the economy, rates, and guidelines; but most importantly, we are here to GIVE YOU CORRECT AND INFORMED ADVICE ON ALL FHA LOANS.

So with that being said, here’s the scoop on the new change in FHA guidelines:

As of October 1, 2008, all Up Front Mortgage Insurance Premiums (UFMIP) for purchases and full-credit qualifying refinances will be 1.75%.

For streamline refinances, UFMIP will be 1.50%.

For all FHASecure, you are looking at 3%.

As for the MONTHLY mortgage insurance premiums, as they have had some slight changes as well, but nothing too major.

Here is the link directly to HUD Memo detailing these changes:

FHA GUIDELINE CHANGES

As always, we’re here to help and welcome any questions you may have!

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HUD’s NEW Proposed Refinance Program

Thursday, October 2nd, 2008

WASHINGTON — The Department of Housing and Urban Development launched a program Wednesday to help underwater borrowers refinance their mortgages, but its details appeared to pose fresh challenges for servicers and lenders.

The agency said borrowers with payment- and debt-to-income ratios over a certain threshold must complete a three-month trial period in a new loan before the Federal Housing Administration would insure it. Some analysts said that stipulation could cause problems.

“Some folks thought the credit ratios would have been a little more liberal, particularly in light of the Federal Deposit Insurance Corp.’s experience with the IndyMac portfolio,” said Brian Chappelle, a partner at Potomac Partners LLC and former HUD official.

The Hope for Homeowners program allows borrowers to take out FHA-insured mortgages, relieving the owners of the old mortgage of a delinquent loan in exchange for writing its value down to 90% of the current home value and waiving any prepayment or late payment fees. The FHA in turn will pay off the old loan and give second lien holders a share in the possible future appreciation of the home’s value.
Though the program was created by a bill passed in July, it left most of the details to HUD and an oversight board of federal regulators.

Under those details, which were released Wednesday, the borrower’s payment-to-income ratio cannot exceed 31%, and the debt-to income ratio cannot exceed 43%, for the FHA to insure a new mortgage immediately. Borrowers with higher ratios — up to 38% for payments and 50% for debt — may still participate, but the FHA would require the three-month trial.

Rod Dubitsky, the head of Credit Suisse Group’s asset-backed securities research division, said the requirement that servicers try a payment plan before turning the borrower over to an FHA-insured loan left room for the original servicer and the new lender to clash over decision-making authority.

“There’s a ‘he said, she said’ potential from the borrower’s standpoint,” he said. The setup “requires the servicer and the FHA lender to work hand in glove.”

Observers said the FHA’s underwriting procedures for the program are also strict. New lenders must obtain two year’s worth of tax returns on the borrower from the Internal Revenue Service, among other things.
The eligibility requirements released Wednesday also dictated that loans be originated before this year. Borrowers must have made at least six payments and must not be able to make more. Borrowers are banned from participation if the mortgage is not on their primary residence or if they own a second home. The new loans cannot exceed $550,440.

At a press conference announcing the details, HUD Secretary Steve Preston said it was open to improvments. “We will continue to listen to the industry as they adopt the program and experience homeowner needs.”
HUD officials and observers said they were hoping that the passage of a bailout bill for the financial industry would make the program more efficient.

Under the existing program, lenders considering making new loans to struggling borrowers would not have any up-front financial incentive. They would only be able to share in the possible future appreciation of the borrower’s home. The bailout bill, which the Senate was expected to pass Wednesday, would authorize the FHA to pay the new lender up front instead. The bill also would encourage servicers to use the program for eligible loans purchased by Treasury as part of its proposed facility to buy $700 billion of troubled mortgage assets.

FHA Commissioner Brian Montgomery would not comment specifically on the fate of the two changes to the plan that are in the bailout bill, but he said HUD was still making improvements to the plan.

“We’re kind of flying the plane and fixing it at the same time,” he said. “Our work doesn’t end today. A good bit of it does, but this product is out there for the next three years, so as we go forward we’ll adjust as we need to.”

By Emily Flitter

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FHA Underwriting Changes – Rental Income

Tuesday, September 23rd, 2008

The FHA is now taking steps to respond to “unhealthy” practices regarding the housing market, especially with FHA and FHA Approved Lenders.

We have seen first-hand, and taken hundreds of applications on, homeowners that are vacating their current residences to purchase another property. Due to rising fuel costs, most people have been relocating to be closer to their work and other great home buying opportunities in their local areas, and in turn, do not want the responsibility of having to pay 2 mortgage payments per month. This being said, the average consumer is under the impression, that with FHA, their rental income should count in qualifying for the NEW home that they are buying- but that MAY not be the case in the near future.

Essentially what is happening is that the Federal Housing Administration is cracking down on their guidelines in regards to potential home buyers that are planning on qualifying on the new home by using the rental income from their current house. Effective immediately,  RENTAL INCOME from their current residence cannot be used in order to qualify for the new home.

We are closely monitoring the temporary underwriting change to see if this will soon evolve into a permanent rule.

There are 2 exceptions to this, however, and they are :

1.) Relocations – The home buyer is relocating with their current employer, or being transferred to an area not within reasonable and locally recognized commuting distance.

2.) Sufficient Equity in Vacant Property – The home buyer has at least 25% equity in the property, as determined by a residential appraisal no more than 6 months old.

If the applicant ALREADY OWNS rental properties that are disclosed on the application, that is OK; this rule ONLY applies to a principal residence being vacated in favor of another principal residence.

Rest assured that you will be the first to know on the ongoing process of guideline changes, as we at FHALoanHouston.com are your FHA Loan Experts!

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FHA Modernization

Tuesday, September 16th, 2008

FHA Modernization

Brian Montgomery, Assistant Secretary for Housing, has testified before the House Financial Services Committee that modernizing the Federal Housing Administration is of paramount importance for America’s “troubled subprime borrowers.” The FHA has been insuring mortgage loans for low and moderate income families since the depths of the Great Depression, but these loans became unpopular with the advent of the subprime market.

However, subprime mortgage loans have proven to be extremely risky for borrowers with bad credit or low income, a problem which has resulted in a recent surge of foreclosures. Home foreclosures not only force borrowers out of their place of residence, but also cost the lender an average of $40,000 and can wreck havoc on real estate investors, lenders, and communities at large.

By approving of the modernization reforms, Montgomery claimed that the “FHA could potentially assist tens of thousands more borrowers who need an exit strategy from their subprime mortgages.” Some of the proposed changes include:

- Removal of the mandatory 3% down payment, which many low income borrowers cannot afford. The FHA plans to switch to a more flexible down payment option.

- Increasing the limits of FHA mortgage loans. Traditionally, FHA had standard loan limits which were often lower than those of subprime mortgage loans. In areas of the country where housing costs are relatively high, many individuals looking to purchase a home could not, as the old FHA loan limits were below the median house prices. With these changes, people in states like New York and California will be able to obtain an FHA loan that will have a loan limit high enough for homes in those areas.

- Creating a new risk-based structure. Currently, all borrowers who apply for an FHA loan are subject to a standard premium. In the new structure, the premium would be based on the credit profile of the borrower and would shift up or down based on that borrower’s level of risk to the lender.

All of these modifications are part of the Expanding American Homeownership Act which passed the House last year by an overwhelming majority. With this new structure, the FHA would not only be able to reach thousands more borrowers, but it would present “a safer, more affordable financing option than many subprime loans,” according to Montgomery. By modernizing its practices and requirements, the Federal Housing Administration will be able to continue increasing homeownership among low-income Americans, minorities, the homeless and the elderly.

Though these sweeping changes to FHA policy will give the most aid to first-time home buyers and families without previous mortgages, the FHA will also continue to offer refinancing options for those who are still working on another loan. As previously noted, many low and moderate income families have found themselves unable to make monthly mortgage payments, mainly due to risky and financially unsound loans. As more and more individuals wish to refinance to a safer, more stable loan, the FHA is there to assist. The number of conventional to FHA refinances has almost doubled in the last year, and as long as borrowers meet a few simple requirements, they will qualify for a more reliable FHA refinance.

- MortgageLoanPlace.com

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