Will FHA Mortgage Guidelines Provide More Refinancing Opportunities in 2009?

Most homeowners, consumers and politicians do not realize that there are significant differences between FHA lending guidelines and the revised guidelines that the mortgage giants like Countrywide, Chase, Wells Fargo, Suntrust and B of A.  Clearly, FHA home loans have dominated the mortgage product line for prime, subprime and foreclosure prevention.  Unfortunately, most of these lenders are spending much of their time staffing up their loss and mitigation departments to provide mortgage loan modifications to their clients who are delinquent on their adjustable rate loans.

Even though FHA has set these changes to take effect on January 1st of next year, you can already see mortgage banks adjusting for HUD’s new FHA policies by shifting their lending requirements to benefit the bank and shareholders.  A select few of FHA mortgage lenders are enabled to implement these new provisions because they are allowed to introduce their own lending restrictions.

The 2009 FHA Mortgage Loan Limits have been set and since the foreclosure crisis continues to pull down comparable sales for appraisals across the nation, the temporarily increased loan limits from the 2008 Economic Stimulus Bill are exactly that–temporary.   The FHA mortgage loan limits will be decreasing in 2009 and so will the hope for many good borrowers who were planning for a mortgage refinance loans next year.  Many California mortgage refinancing opportunities will disappear…

Borrowers in high cost areas like Southern California, have to search for alternative lending options because as of January 1st 2009, FHA will no not insure mortgage loans above $625,500.  These jumbo mortgage loans will likely see higher interest rates and more borrowers could find themselves in line for a loan modification. 

Hopefully the new year will bring true mortgage refinance opportunities for homeowners who need it most.  The FHASecure program and Hope for Homeowners looked great on paper, yet very few homeowners were actually able to qualify for the foreclosure prevention programs because the lenders simply didn’t want to take the risk that FHA guidelines allowed.  Only time will tell, but maybe President elect, Obama can throw some optimism this mortgage brokers direction.