Mortgage Melt Down - Who's Fault?

The Real Culprits In This Meltdown from Investor's Business Daily

FHA Gift Funds - HR 6694 - New Hope

I'm sure everyone is aware that on Oct 1st, HR 3221 will put an end to seller funded gifts for a buyers down payment on an FHA mortgage. The gifts are generally channeled through Nehemiah or Ameri-dream. There are strong arguments on both sides of this issue and I won't bore you by going into them here.

I was about to update my websites when I ran across an article on inman.com: Congress weighs reprieve for seller-funded gifts. HR 6694 would allow builders to continue providing down payment assistance.

I'm not sure how I feel about this yet but I will say the proposal does add more control or safe guards if you will, for the program. HR 6694 will allow borrowers with credit scores of 680 or more to use seller-funded down payments. A credit score of 620 to 680, if using down payment assistance would pay higher insurance premiums.

Borrowers with scores lower than 620 will not be allowed to use these gift funds until sometime in 2009 if HUD wants to expand the program. The issue here is FHA's insurance requiring taxpayer subsidies. The article goes into more detail so you should go read it.

I do like the controls they are trying to apply. I would do one more thing if I had a voice. I would make these gifts direct to the borrowers at closing and eliminate channeling it through Nehemiah or other such organizations. These organizations charge a large fee which helps to inflate the loan amount. Put it in the guidelines and eliminate the unnecessary middle man.

Home buyers with good credit need access to mortgages with no down payments. If HR 6694 does not go through median income families do have another choice that many people don't know exist. That option is the 100% LTV Rural Housing Loans. It is a very good loan and easy to qualify for. Go to this website and review the benefits and guidelines. 100% housing loans.

Zero Down Payment Mortgage

100% financing is still available in the mortgage market. I know, you listen to all the financial doom and gloom from the media and you would think every lender just locked their doors and went home. It's not a good situation but it is not as bad as the media wants you to think.

Remember, it is also an election year and every election year, both political parties talk about how bad the economy is until we believe them. Then one is elected and they save the day, ... and the economy. Don't ya just love it!!

Here is a news flash. People are still buying homes. Yes, mortgages are available and everyone should realize that this is the best time to invest, or purchase a home. (When the price is low.) Have you ever heard the term "A Buyers Market"? That is what we have here.

History shows that Real Estate and our economy runs in cycles. Back in the late 70's and 80's it was a 4-5 year cycle. You could graph it. Then, when the sub-prime loans were forced on lenders (early to mid 90's) by government regulation the cycle changed. They became longer and were more intense until it all caught up with us and here we are, like it or not.

I don't like it either but more than that I am tired of all the finger pointing and blaming, and dreading, and media hype. I don't believe a "bail out" is the answer but obviously, it is not my choice or yours, or we the people's choice. Our elected officials will make the decision and base it on "no stronger ground" than what you and I base our own opinion on.

Alright all ready! So do it, what ever it is, so We The People can get over it and move on. We have been through worse times and we will survive and prosper. I think it is in the DNA of the USA. (sorry, that was really bad) We survive in spite of the people we have elected to office.

If you must have 100 Percent financing it is available, ... just not in the form of previous no-doc, no-verification sub-prime loans. You have several options. FHA, VA, Rural Development, or special products based on perfect credit and stability. The USDA Rural Development product is one that few remember or know about.

USDA Rural Development has two programs: Direct and Guarantee. Their Direct program is a mortgage provided directly though the rural development office and your income can only be 80% of the median income for that area.

The Guarantee program on the other hand is provided by USDA approved lenders and Broker originators. It is a guarantee program, there is no subsidy or recapture, and the income restrictions allow up to 115% of the median income after special adjustments.

This is a 100% LTV mortgage based on the APPRAISED value, not the purchase price. The credit guidelines are very flexible and the guidelines have no minimum buyer commitment and no maximum on seller concessions. Note: some lender policies may be stricter here and USDA will always respect the lenders prerogative.

OK, so let all of us get over the failure of our market, roll up our sleeves and move on to a brighter future. Remember, NOW is the best time to purchase, during a buyers market!

You can read more about the guidelines for the rural housing mortgage at: zero down payment