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Mar
30

FHA Mortgage Loan Programs Expand

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Consumers and mortgage lenders continue to reap the benefits of FHA home loans that boast low FHA rates.  The Association of Mortgage Investors announced their support for the second mortgage program announced by the Obama administration to provide a path for reduced principal through a mortgage refinancing program for homeowners who owe more on their mortgage than their house is valued at.  Micah Green, an attorney who represents the Association of Mortgage Investors said, “Investors have long felt that the only way to provide homeowners further mortgage relief is to address the affordability and loss of equity issues.” Many home finance executives believe that this step is crucial for the housing market to mend itself long-term.

A few days ago, FHA announced a variety of new home purchase and refinance programs intended to help reduce the number of new home foreclosures. The FHA loan initiatives range from a forbearance plan for unemployed borrowers, to new incentives that encourage principal reductions, to a new FHA refinance option, for which lender participation is voluntary.  “Importantly, there are many details of the FHA guidelines that need to be clarified from the latest FHA announcement like,  how second mortgages are treated, to ensure that the homeowner’s total debt burden is not excessive,” Green said.  1st and 2nd mortgage investors must be committed to sharing the burden of providing principal reduction in order for troubled homeowners to achieve sustainable relief that will be provided by a properly sized refinanced FHA mortgage, Green says. “This program should also respect the priority of liens. Therefore, principal reductions of senior and junior liens should be carried out accordingly,” he says.  FHA mortgage refinancing remains popular with lenders and brokers across the coountry, so chances are HUD will keep FHA lending around.

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1 Comments

1

Terrific work! This mortgage article helped me understand where the market is headed. Shame on the our government for not adding more loan programs like FHA.

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