The new FHA loan program, Hope for Homeowners was created recently to help minimize foreclosures, but so far there are too many hurdles for the average distressed homeowner to overcome and very little borrowers have been able to qualify. FHA continues to actively consider several mortgage loan modification plans and most lenders believe they will see a good mortgage refinancing solution in 2009. The housing market is complex and when it comes to lending guidelines to decrease loan defaults and foreclosure there is a sharp contrast between loan guidelines and loan work-outs. Hopefully FHA, Fannie Mae, Freddie Mac and the mortgage lenders will work together for a solution that provides foreclosure prevention and loan performing results that will get our economy and housing market back on track
FHA eliminated their down-payment assistance loan Programs on Oct. 1. These mortgage loans designed to help first time homebuyers enabled the seller to offer the buyer down payment assistance. Housing Wire reported recently that FHA commissioner Brian Montgomery criticized DAP, reported the mortgage news site Here’s a clip from that story: Montgomery recently stated, “Data clearly demonstrates that FHA home loans made to borrowers relying on seller-funded down payment assistance go to foreclosure at three times the rate of loans made to borrowers who make their own down payments.” These high risk mortgage loans presently make up one-third of the FHA’s loan portfolio. Montgomery added that the agency booked an additional $4.6 billion in long-term losses when reassessing their annual figures. “No insurance company can sustain that amount of additional costs year after year and still survive,” he argued. “Unless we make corrections to mitigate these losses, FHA will soon either have to shut down or rely on appropriations to operate.”
On a more positive note, DataQuick recently announced a 62% increase since last year with 2,667 SFR home and condo sales were reported in September. This is the largest 1 year gain since DataQuick started tracking this data in the last twenty years. FHA mortgage lending continues to soar with 28.6% of August buyers using the program, up from 27.2% in July and 9.5% in August 2007. According to the Census Bureau, FHA released data for new home sales indicating that homebuyers continued to use FHA home financing 17% of the time in the 3rd quarter which is up from 15% in the 2nd quarter and 4% in the 3rd quarter last year.