As with any hot news topic, the modernization to FHA Loans has many proponents as well as opponents. Although I am a strong supporter of FHA reform, I wouldn’t want anyone thinking that FHABook.com is unaware of the criticisms. This post by Dr. Housing Bubble presents an opposing view point. Although I don’t agree with many of the points, they are well thought out and worth considering. My biggest counterpoint to the article is that, although the FHA caters to borrowers who otherwise would have gone with a subprime loan, it is not a subprime. FHA has many more safeguards and guidelines to protect consumers that were obviously absent in subprime lending. FHA loans have been around for nearly three quarters of a century, subprime barely held on a decade.

This post on SeattlePI.com is another example of the woes being faced by borrowers because of the subprime problems. However, people who are no longer able to get subprime loans, were probably getting themselves into a situation that would end up being trouble a few years down the road. The people of Seattle should look on the bright side. Guess I can’t blame the dreariness…All that damn rain….

FHA Mortgage Center

The FHA Mortgage Center has named FHA Book one of the Best FHA Blogs on the web. That’s cause for celebration!

Wondering exactly what the passage of HR 1852 means for the FHA and borrowers? Head over to Peter Miller’s FHA Mortgage Guide to learn the specifics. Peter has laid out all of the changes and what they mean in an easy to read format. Check it out!

This article on ABC News.com was published shortly before the announcement that the Fed cut the intereste rate by half a percent, so you can ignore the “if they cut it this much…” part. The important thing about this article is that it explains what this means for the average person. No financial jargon. More specifically, here’s the part that really matters to borrowers:

And what does this mean for consumers? Will it help us get a handle on our mortgages and our credit card debt?

The bottom line is, lower interest rates are a good thing for consumers. While the Fed does not directly control mortgage rates or interest rates on credit cards, it does have an indirect impact on these rates. Credit card interest rates will dip slightly, as will auto loans and, even, mortgages.

Homeowners with adjustable rate mortgages could see their rate reset at a lower amount, which is good news. However, the cut would not have a meaningful impact for consumers. The typical credit card holder could see their monthly payment drop only a couple of dollars, and homeowners could see mortgage rates dip slightly.

For those of you seeking financial jargon, here you go.

HR1852 has passed by a vote of 348-72. The article posted on TownHall.com gives the basics about the bill and has lots of quotes from key lawmakers. Hopefully the bill will be able to help many people in the ever deepening mortgage crisis:

The bad news deepened again on Tuesday. Research firm RealtyTrac Inc. said the number of foreclosure filings reported in the United States last month more than doubled compared with August 2006 and jumped 36 percent from July _ a trend signaling that many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid the housing slump.

An estimated 2 million to 2.5 million adjustable-rate mortgages are scheduled to “reset” this year and next, jumping from low “teaser” rates for the first two or three years to much steeper rates that could cost borrowers their homes. The wave of resets could crest during the presidential and congressional election campaigns next year, and the issue has brought politically charged debate in recent weeks over possible responses by the government.

Supporters of FHA loans have been waiting a long time for this and the passage of HR1852 is great news!

Here’s a good perspective from David Nickalus of the St. Louis Post-Dispatch. Nickalus takes a hard look at whether FHA Secure is helping out borrowers who were tricked or bailing out the lenders and borrowers who thought they could beat the risks — I suppose it’s a bit of both.

Nickalus muses:

Of course, not all of those 2 million borrowers deserve either sympathy or government help. Many knew they were playing a speculative game, betting that they could refinance or sell for a quick profit if housing prices kept rising.

These folks aren’t victims. They bet on a continuation of the housing bubble, and they lost. But they — and the lenders who were all too willing to make no-documentation, interest-only loans — would benefit from some of the more ambitious proposals floating around.

He’s right. Although with the standards for FHA Secure a lot of the borrowers who were playing it unsafe well be kept out, some irresponsible borrowers will be getting help that they probably don’t deserve. As my father always said: Life’s not fair.

According to MSNBC, the FTC is investigating the legality of some mortgage ads. Here’s the heart of it:

Some marketing pitches rely heavily on the financial benefits of these products. But emphasizing only the advantages of a loan is unacceptable, according to Lucy Morris, an FTC attorney working on the deceptive ads investigation.

“If they’re only telling you half the truth and only telling you the good things and not telling you the other important things you need to know in evaluating a mortgage advertisement, then that may raise questions under the Federal Trade Commission Act and the Truth in Lending Act, which we enforce.”

Looks like the Sub-Prime vultures are getting what they deserve, on a number of fronts.

According to MSNMoney.com, here’s just some of what’s going down at Countrywide Financial:

– Reductions in workforce which will occur in areas most impacted by lower mortgage market origination volumes. The Company presently estimates a total workforce reduction of 10,000 to 12,000 over the next three months representing up to 20 percent of its current workforce. Actual reductions could be lower should the interest rate environment and related market volume outlook improve. Based on current interest rate levels, Countrywide presently expects that total market origination volumes will decline approximately 25 percent in 2008 compared to 2007 levels.

I think this was to be expected. Predatory lending is proving to be a lose-lose situation - even for the predators!

CNNMoney.com is reporting that IBM’s lending services will be using FHA Loans.

The Charlotte, N.C., business unit, which provides back-office services to mortgage lenders, also obtained approvals and licenses to provide these services in the majority of states, and plans on completing the state licensing process by the end of the year.