Someone got a half a loaf on Capitol Hill last week with the passage of higher loan limits for FHA-backed mortgages. They also lost half a loaf with the failure to increase loan limits for conventional mortgages bought by Fannie Mae and Freddie Mac.
The result of the final compromises looks like this: Read the rest of this entry »
The FHA is making headlines again with worries that the entire program is mired in financial trouble. The title of this post is the same title of a study supported by the American Enterprise Institute, a conservative think tank, which argues that the federal home insurance program could need more than $50 billion in taxpayer money to maintain needed reserves.
Alternatively, despite the worst real estate market in decades, the latest FHA annual report shows with real numbers and results that the program is actually doing fairly well: Read the rest of this entry »
The decision to reduce mortgage loan limits has set off a spectacular level of negative reaction. But a look at the facts and the numbers tells us there’s little cause for concern.
Claim: FHA will suffer…
According to the Las-Vegas Review Journal, a lot of condo owners in Nevada are fairly sore with the FHA. As the paper explains:
Thanks to high numbers of investors and association dues deadbeats, the majority of Clark County’s 90,000 condos are now or could soon be off-limits to most buyers, setting up a vicious cycle that could depress prices even more. Adding insult to injury, condo owners with some federally backed loans are no longer eligible for refinancing.
It was back in 2000 when the Electronic Signatures in Global and National Commerce Act was passed, allowing many contracts to be signed with electronic signatures.
Are “e-signatures” a good idea for FHA mortgages?
For the last few years, it has been the FHA which has kept the mortgage marketplace afloat. FHA loans have consistently offered financing with little down, market mortgage rates and no gotcha clauses.
Now, however, some see doom ahead for the FHA program.
Following in the steps of Bank of America and Financial Freedom, another huge lender has announced that it will no longer sell reverse mortgages.
Wells Fargo says it’s leaving the reverse mortgage business. It will no longer sell home equity conversion mortgages (HECMs), reverse mortgages sold to those aged 62 and above and insured by the FHA. The company will continue to service current borrowers.
One of the strangest new requirements coming out of Washington is that borrowers must actually have the ability to repay their mortgages.
At first this sounds entirely ridiculous because mortgage lenders would seem to have an obvious interest in getting repaid. Unfortunately, given no-doc loan applications and other short-cuts that lead to the mortgage meltdown, the sense in Washington is that baseline mortgage requirements must be spelled out in detail–otherwise lenders will bend or evade the rules.
The FHA’s new commissioner, Bob Ryan, has been on Capitol Hill recently giving his view regarding the qualified residential mortgage (QRM), the home loan that is destined to play a big role in the mortgage market looking forward.
Under the Dodd-Frank Wall Street Reform Act, lenders can make QRMs or loans which are not QRMs. This is not a light choice, however. The law passed last summer virtually requires lenders to make QRMs. Why? If as a lender you originate a loan which is not a QRM, you must keep a reserve equal to 5 percent of the loan amount.
HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.
