Wednesday, August 27, 2008

FHA Rescue Program - FHA Secure

The Housing Recovery Act of 2008, H.R. 3221 has the consumer and mortgage professional in a state of total confusion. This recovery act is suppose to be the answer for all the wrongs in the mortgage industry. It is so over hyped and misunderstood. My personal opinion is that it is a total boondoggle put together by a bunch of politicians to further their own agenda or make themselves out to be hero's, or to get their names in the headlines.

I get questions every day like the following: "I have a $40,000 tax lien on my home, can I get the FHA Rescue program??"

This individual was actually referring to the FHA Secure Program which was available in September of 2007 and will terminate December 31, 2008. (Mortgagee Letter 2007-11)

This is a good program but it too is overstated and misunderstood. FHA Secure does NOT modify or waive FHA underwriting guidelines and requirements. For a better understanding of this program you should read the mortgagee letter here.



Tuesday, August 12, 2008

102% LTV Government Guarantee Mortgage

I just came from a training class on a mortgage product I was totally unaware of. It is the USDA Rural Development Loan. Wow, those of you that follow my blog know that I am an advocate for the FHA Mortgage. It is a great loan and always has been.

But this loan product I have to say is better than the FHA program. The USDA Rural Development program is focused right on median income families. Here are some of the highlights:

  • Funding up to 100% of the APPRAISED Value, not purchase price, or 102% if financing the 2% guarantee fee.
  • There is no private mortgage insurance. (this is a big deal)
  • Purchase loans only
  • Flexible credit guidelines and income ratios
  • There are income and property location restrictions.
  • no reserves required
  • no maximum seller concessions or gifts

Income restrictions mean if you make too much money you can't have one of these loans. Yes there is a debt ratio standard and that is 29/41 or if the home was built to 2000 energy code that can go to 31/43.

Property restrictions are based on location. This is a rural development program so as you can imagine, homes in large cities don't qualify.

The credit guidelines flexibility is totally unreal. If you have a credit score higher than 620, trade line information is irrelevant and not considered. Yes, that means late pays, collections and judgements. Bankruptcy and foreclosures don't have a timeline if there is a substantial reason.

Another great thing about this loan is that it is not an FHA loan and the lender does not have to be HUD approved. That means a lot of independent brokers now have a terrific loan product, better than an FHA product, they can offer to their customers.

I am really excited about this loan product because after all the mortgage crisis fall out there just are not many options for lower income families. This is a Great program and unless you are a total dead-beat you can still get into a home. The funny thing is this is such a great loan that the majority of home buyers actually have credit scores higher than 620. It's their best option and the interest rates are low!

Oh, these loans are only 30 year fixed rate. This is a hoot, I love it. If you have any questions about it send an email or ask in a comment.

Oh, I almost forgot. If you live in the state of GA there is a lender that specializes in this loan. I recommend you contact Peach State Mortgage for your USDA mortgage. This program is nation wide so contact me and I'll turn you on to the USDA office nearest you.



Thursday, August 7, 2008

New Housing Law HR-3221 VA impact

The new housing recover act that was signed by President Bush is just jam packed with all kinds of great stuff. Well, maybe not all of it is so great but indeed some of it I was unaware of. I had no idea it made changes to some of the Veteran issues.

I'll be posting more about the other issues in the coming days but today is just about the Veterans Administration Changes. I think these are all good!

  • It increases VA home loan limit for high cost housing areas

  • It increases the time a Lender must wait before beginning foreclosure proceeding from three months to nine months after a service member returns from service AND gives returning soldiers one year relief from an increase in their mortgage interest rate.

  • The act expands eligibility and increases the amount for special adapted housing benefits for the disabled. This is about money paid by the VA to help Vets make structural changes to their home to accommodate their disability.

  • It also requires the Department of Defense to put together a counseling program for veterans and service members facing financial difficulties. It also establishes a moving benefit to service members who are forced to move out because their RENTAL housing was foreclosed on.

YEA!! I can really identify with the last bullet. This actually happened to my son. He was renting a lovely home in San Diego. He went to sea for 6 months. While he was at sea the house was foreclosed on and he was, ... up that well know creek. He lost his last month rent, security deposit and 50% of his household goods due to theft. When he got home, there was no home. He didn't even know where his stuff was.

This just happened in June of 2008. The stress he went through was unbelievable and he still has not recovered financially. I wonder if this benefit is retroactive and if so, to when?

He is back at sea again and I pray the home he is in now will be there when he gets back.



Monday, August 4, 2008

FHA Changes for 2008

The Housing and Economic Recovery Act of 2008 was signed by President Bush on July 30th but many people in the industry don't understand just what the changes are and how they will be impacted by them.

If those of us in the industry are confused just think how the consumer feels. Part of the problem is that there is so much information and it is hard to research because it is contained in many "ACTS" that were folded into the final ACT. Are you confused yet?

It may be the final ACT that means curtains for many of us. Sorry, that was really bad!

I have put together a page that covers what I have been able to unravel to this point. You'll find it here at Housing Recovery Act. I am still researching so that page will be updated as time goes by.

Here are some of the FHA changes and when they become effective:

  • Minimum down payment has increased to 3.5%. effective Oct. 1, 2008
  • Prohibits down payment assistance that is financed by the seller. (Nehemiah etc..) Oct. 1, 08
  • Places a 12 month hold on HUD's implementation of risk-based premiums.

There are many other issues so visit Housing Recovery Act.

Good Luck