I read a press release today on prnewswire that was discussing the statement by Nancy Pelosi. I want to share about the statement issued by Speaker Nancy Pelosi on a report issued on November 27, 2007 by the U.S. Conference of Mayors on the economic impact of the mortgage foreclosure crisis. I would be remiss if I did not share this and share some observations. The below statement is action taken by the House of Representatives to address the mortgage crisis:

“Today, the U.S. Conference of Mayors released a significant report warning of the impact of the mortgage foreclosure crisis – a weakening of our economy and the economic security of American families. As individuals struggle with the subprime mortgage crisis, the report concludes that its impact could be nationwide, with weak residential investment, lower spending in the construction industries, and curtailed consumer spending. This demands serious solutions.”

“Already this year, and with the support of America’s mayors, the House has taken swift action to help families struggling to make mortgage payments and avert this potential economic downturn. With bipartisan support, we have reformed the Federal Housing Administration so it can help people at risk of foreclosure stay in their homes with affordable loans and refinancing options; taken comprehensive anti-predatory action to prevent bad loans from being made in the first place; and expanded housing counseling for distressed families who are at risk of losing their homes.”

One of the things that I want to highlight is regardless of the financial struggles that have been happening with home owners, almost every story I read says that FHA is an option. They have taken steps to help those who are in trouble and educate them to prevent foreclosure. Not saying that FHA is the only one, however, let’s go back to September when some action was taken to expand American Homeownership. The House passed a bipartisan bill to enable the Federal Housing Administration to serve more subprime borrowers at affordable rates and terms, recapture borrowers that have turned to predatory loans in recent years and offer refinancing loan opportunities to borrowers struggling to meet their mortgage payments in the midst of the current turbulent mortgage markets. These reforms would help some 200,000 additional families if not more, purchase or refinance into safe FHA-insured mortgages.

Second and this is an observation that I have made. I find it almost like “karma” that the very mortgage companies that were practicing these subprime loans are now filing bankruptcy and closing their doors. Stop and think, this has to affect those employees as well. Will they stop and think about how they treated those consumers that were asking for help and they potentially said no. Let’s face it, what is happening in the housing industry is far reaching and it is not over. Many are being affected and there has to be a better solution to helping families when they are struggling.

I invite you to write to us and share what you believe would be some options for those that are struggling, do not know where they can turn and are a step away from foreclosure. I ask because there is always going to be someone that is not able to reach out and say I need help. That very person could be your neighbor or your co-worker that is reading this blog. They might not say anything to you, but they are reading for answers. I ask that you share your suggestions today, you never know who it might help.

Taffy Wagner

How many of you know there comes a time when your house will need some improvement? Of course this might not happen for a few years if you recently purchased a house that had to be built from the ground up. But, if you purchased an existing home that was already several years old, there could be a need for home improvement. Have you ever thought about how you were going to pay for these home improvements? I have to admit I am not into remodeling and painting and things of that nature. I am not one of those people that sit and watch all the home shows that come on television even though my husband is quite the fan. As a matter of fact, our twins even love watching these shows. Kudos to them for learning at a very early age what they like and dislike in the way of fashion and home decoration.

Even as I write this, they are fans of going to model homes and looking at the different layouts, floor plans and color schemes. If you are into that then remodeling and upgrading your home is ideal. I imagine you would already have an idea of how you would pay for it. If you had no idea, FHA has a home improvement loan. You have to see this because this could be an answer to your prayers. The Federal Housing Administration (FHA) allows loans up to $25,000 without any equity in the home. The loan can exceed the value of the home. Before you run right out and do this, read the entire blog. There is more to this and I don’t want you to miss anything.

I did some research to find out more about the home improvement loan. I found out that the Title I program insures loans to finance the light or moderate rehabilitation of properties, as well as the construction of nonresidential buildings on the property. That means you cannot do a complete overhaul of your house. That says to me you cannot tear the house down and start over from scratch. In my opinion, this would be along the lines of potentially finishing a basement or have air conditioning put in your home. Those are light to moderate adjustments to the property. Furthermore, this particular program may be used to insure such loans for up to 20 years on either single or multi-family properties. Remember that did not say you would get $25,000 but it said up to that amount.

I was happy to find out these are fixed- rate loans, especially after all the stories on foreclosures. It seems the picture is becoming very bleak as you read the local news or watch national news on television regarding the housing industry. For that reason alone it is very important that you continue reading all the information you can about housing, loans and current news. I do not believe you can ever have too much information, although you can be in a place where you have not received enough. Most of the time when that happens it is to your detriment and not your benefit. So I recommend strongly that you slow down, read all the information you can get your hands on and plan for a successful financial housing experience.

Taffy Wagner

Foreclosure—Colorado, Texas, Michigan, Massachusetts and more. Over and over when you see stories on the news, probably even if you look in your local newspaper, there are stories of foreclosure. I can’t even tell you how often the stories are happening here because for a period of time we were number one in the nation in foreclosure. We are not number one but remain in the top ten.

What are the options for people facing foreclosure or seeking to avoid foreclosure when they first notice there is trouble? Do you believe that everyone should be given a second chance even in the housing industry? I am of the mindset, that people should be given a second chance. Let’s face it; the first time anyone purchases a house, they might not have been aware of all the financial obligations that encompass home ownership. I’m going to list some of the options that I found.

Option 1 – There are foreclosure conferences and foreclosure seminars to prevent foreclosure. I found there are some Mayor’s meeting about foreclosure at a meeting in Detroit. When foreclosure happens, it affects more than that one family. Especially when it reaches the magnitude that it has already and the worse part is, it’s not over yet. So what are people in decision making positions to do? Do you believe there is “Wisdom in a multitude of counsel?” I have to tell you I do. Or do you like the saying “two heads are better than one?” Regardless of which saying you like, it says you cannot do it alone. Same for the person that is facing foreclosure, get some help.

One of the options that will be discussed at the Detroit foreclosure article that I read is FHA Secure. Since it didn’t have enough detail for me I took it a step further and did some research. Our readers need to know right. Seems back in August of this year, a new loan product called FHA Secure Loan was going to come to the rescue of some not all homeowners who were unable to refinance at that particular time and help stop foreclosure for many homeowners who struggled with adjustable rate mortgages. I surmise from the previous Detroit foreclosure article I read, this program will be discussed and those who can qualify will be given this option. There are 80,000 that this loan is supposed to be laid out for. What happens to the other million and something that need help?

What is a second option for people that are facing foreclosure or trying to prevent a foreclosure from happening? One of the things I would recommend is if at all possible, downsize in housing before you get into a foreclosure situation. I have heard of people that have tried to get out of their housing situation only for the bank not to work with them or help them. If you can see that there are situations arising that will prevent you from paying your mortgage – decide what your options are. I am sure you realize by now, I believe in dealing in solutions not problems. There have been too many times when people are overwhelmed and emotional about the problem and cannot see options. Let’s share options for those that are reading that potentially could be in this situation and are embarrassed.

I am always happy to see information that I was not aware of when it comes to mortgages. The more I find out, the more I will share with you so you can remain an informed consumer make the appropriate decision. Today I am going to discuss several different types of loans. The particular loan I am going to start with today has to do with Energy Efficient Mortgage. Not to say that I was surprised; however, I felt people arranged for energy efficient assistance once their utility bill became unmanageable.

Glad to say that I was wrong. That is not always the case sure it does happen but not always the reason for an energy efficient mortgage. The Energy Efficient Mortgage allows a homebuyer to save future money on utility bills. I am not saying whether I recommend or do not recommend but read all the details below and you decide.

With an Energy Efficient Mortgage you can finance the cost of adding energy-efficient features to a new or existing home as part of an FHA-insured home purchase. I would have to even ask you at this point is this an option you could consider? The Energy Efficient Mortgage can be used with both 203(b) and 203(k) loans. As you know, with all loans there are requirements you must meet before you can be approved for this type of loan

Basic guidelines are:

• Cost of improvements must be determined by a Home Energy Rating System or by an energy consultant. Very sensible this cost must be less than the anticipated savings from the improvements.
• One- and two-unit new or existing homes are eligible; condos are not. For those people that like to purchase condos – look at the advantages and disadvantages to purchasing and living in a condo.
• The improvements finances may be 5% of property value or $4,000 whichever is greater. The total must fall within the FHA loan limit. You do not want to exceed the FHA loan limit.

Before you start with any loan paperwork or visiting the property, be sure that you have sat down and written out all of your questions regarding this property. Even if you think it is a sill question. The only limiting question is the one that doesn’t get answered.

The second type of loan

I must admit, I have not ever heard of this type of loan. If someone has heard of the next type of loan, shoot me an email and share your experience with this type of loan.

Are all the couples or brides ready that are reading this blog? Here is one that you might not have even heard before — the Bridal Registry. I saw the wheels in your mind turning and you are right, you may register at a department store for wedding gifts. The Bridal Registry program allows couples to register with a lender and open up an interest-bearing account family and friends can deposit weddings gifts of cash into the account. I think this is a marvelous idea for those who plan to purchase a house in the future. Seems to me this might give you a head start over others that didn’t do it.

How many bride and grooms do you know that will run right out and sign up? I am not sure but want to make sure they know it is available. Ask your lender for complete details.

Dr. Taffy Wagner

FHA Home Loans have many options that anyone can consider. The purpose of writing on this particular topic is to share with you what is available. I was not aware of all the different types of loans that FHA had to offer. Sure you will know about some of the ones that I talk about it, but there might be others that fit your situation better. So before you run right out and say you want a specific type of loan, read this thoroughly. Do additional research if necessary and choose what works best for you.

I heard you guys say, you are always saying research, research – couldn’t I have done enough research by now. Not necessarily and research aids in making informed decisions versus impulse decisions which lead to error, owning the American nightmare versus dream and even imposed tension in a marriage because someone did not research thoroughly before signing on the dotted line. I can’t tell you how many times I have heard that and have even witnessed something happening once or twice in my own marriage because all the information was not received up front. Don’t leave it up to the mortgage banker, broker or realtor to give you all the information. Do your own homework and research. At the end of the day, you are responsible for the mortgage payments and all that is involved with home ownership.

Let’s get to the different types of loans which I am going to talk about over two or three days. If it takes two days to cover it, then that is what it will take; otherwise it will be three. First we have the FHA 203(b) Loan – from what I read it is the most commonly used, offers a low down payment, flexible qualifying guidelines, limited lender’s fees and a maximum loan amount.

I believe one of the biggest benefits of any loan is having a loan with a low down payment. If you have a low down payment that alleviates more of a pressure of attempting to manage a higher down payment when you know you don’t have the money. When I was reading about this loan, it said this loan enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage. This meaning it is divided with a portion being used to pay off the seller’s existing mortgage and the remaining is placed in an escrow account and released as rehabilitation is completed.

Correct me if I am wrong, if it has to be rehabilitated isn’t it a pre-existing foundation? I would believe if it wasn’t pre-existing that this type of loan would then not be available for this particular buyer and the buyer would have to begin his or her search all over again. Definitely send me some comments on this, help my understanding of the 203(b). I am always looking for information that I believe has not been shared on a larger scale to share with my readers.

We have discussed the 203(b) – send me your comments and thoughts about this type of loan. Even if you have had this type of loan, what do you think the benefits are or what is the downside?

Dr. Taffy Wagner

You can imagine my surprise when I saw the above title because I believed everyone was in the business of helping people obtain the American dream. Hold on before you make any assumptions based on that title and continue reading. I was that person that was about to do that very thing and decided to continue reading this news before I made any conclusion. Why you might ask? Because I am familiar with several organizations that assist people with downpayment assistance and they are necessary. Not seen as optional but for many they are necessary.

From what I surmised reading this news is federal regulators take a step to shut down programs providing down payment assistance utilizing money from home sellers because the assistance ends up added to the purchase price. I recall when my husband and I were preparing to sell our first home, we were prepared to kick back some money towards the sell of our home, whether it was closing costs or downpayment assistance. We knew our market and how difficult it could be to get a home loan if you have a few items of discrepancy on your credit report. We didn’t find anyone when we attempted to sell it on our own. However, when we worked with a realtor, we had a buyer in less than a week.

The story I read says at the end of the day, the buyer financed the down payment. In that regard, they did not get assistance. They paid for it at the end of the day. Let me share what ended up happening when we did sell our first home. We were at the closing table with our realtor and the buyers, had their realtor and of course the lender was there. My husband and I had agreed to give a certain amount towards their closing costs. As everyone was sitting there running the numbers, the lender said the buyer can only receive x amount of dollars back nothing above that number. Next thing my husband and I experience is we were receiving more back than what we were originally told from the sale of our house.

Did the buyers need assistance? I am sure they did. I believe the buyers should benefit and not be punished in some fashion. It almost seems as if that lender was penalizing them for their situation. That was soooo many years ago, that I would not even be able to say if it was a FHA loan or not. However, FHA requires buyers using the loans it backs to put down at least 3 percent of a home’s purchase price. I remember my husband and I had already discussed what we needed to put down before even purchasing a house. We wanted to make sure we had money set aside that we could afford and not be in a situation because it was all going towards down payment. They require some family members and some charities to contribute to the down payment but sellers may only contribute to closing costs.

Once again, before you get that FHA loan do your homework. Make sure you aware of all the parameters so you can make an informed decision. Not everyone is in agreement with the ban, understandably so. Research, research is key and preventative.

Dr. Taffy Wagner

Now that you have read the initial qualifications of the FHA reverse mortgage, before you get in your car and drive to your loan officer’s office or call on the telephone let’s finish discussing all the pertinent details about FHA Reverse Mortgage. Wouldn’t you be embarrassed if you went at this stage and they asked you several different things that would be revealed later in this blog that eliminated you from qualifying? It’s very important that you always get all of the details before acting too fast. That’s a tip for any area of your life, not just mortgages.

From the different stories that I read several months ago, I could never ascertain what types of homes were available for a FHA Reverse Mortgage so I am going to elaborate on that. Homes must be a single family dwelling or a two-to-four unit property that you own and occupy. It appears that you have to own the home and live there, not just own the home. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. This is another area where you want to verify with the HUD- approved counseling if your residence would be available depending upon the type of dwelling. This leads me to believe all types of homes don’t qualify.

Since we know this type of loan is for elderly adults, seniors if you will a concern that I had was would they be actually leaving a bill to their surviving children, especially if the home was not paid off. Remember an elderly person 62 years of age or older can receive a FHA Reverse mortgage. This is what happens, when the homeowner sells his or her home or no longer use it for their primary residence. They will have to repay the cash received from the reverse mortgage, plus interest and other fees to the lender. The remaining equity in the home, if any belongs to the owner or their heirs. None of the assets will be affected by HUD’s reverse mortgage loan. Additionally, which I believe is great and was a concern of mine was if the debt could be passed along to the estate or heirs and fortunately it cannot.

I would like to point out a concern that came to my mind. Wouldn’t one of the reasons an elderly person potentially takes a reverse mortgage would be to help with additional medical bills or something of that nature? I say this because if the homeowner sells his or her property and no longer use it as their primary residence, they are now going to be hit with all these different financial obligations that they might not have planned on. Of course that means, prior to getting this type of loan you must ensure you are able to manage it, including if you sell your primary residence. Do not take on more than you can handle or you will be miserable.

Maybe you are a reader and wondering if you can still apply for a FHA reverse mortgage if you current loan is not an FHA loan. From what I read on the Department of Housing and Urban Development you don’t have to because your new reverse loan will be a FHA-ensured loan.

What do you think of FHA Reverse Mortgages now that you have all this information?

Taffy Wagner

I have read different stories about a reverse mortgage and thought it was time I found out truly what a reverse mortgage is, who qualifies and what is needed for them to get a FHA Reverse Mortgage. I have heard good stories and bad stories, so I felt this was one of those items that should be discussed.

According to U.S. Department of Housing and Urban Development, a reverse mortgage is a special type of home loan that lets a homeowner converts a portion of the equity in his or her home into cash. Before you think right away that you can run right out and get a reverse mortgage, keep reading. You might not even qualify.Unlike a traditional home equity or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD’s reverse mortgage provides these benefits and it is federally-insured as well. I know you are thinking great, can I go and apply now. Not just yet.

As you know with every loan whether it is a reverse mortgage loan or even a traditional loan, there are specific requirements you must meet in order to qualify for a loan. The first requirement for a HUD reverse mortgage loan is HUD’s Federal Housing Administration (FHA) requires (sounds non-negotiable to me) that the borrower is a homeowner, 62 years of age or older; own your home outright or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan and you must live in the home.

I know that was a mouth full so let’s break it down. First, the borrower must be 62 years or age or older. If you are not this age or older, you do not qualify for a HUD reverse mortgage. I would say move on to find other options for your particular situation. Second, you have to own your home outright or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan. Does this make sense at this point? Third, you must live in the home. Fourth requirement which notice I did not say optional is that you receive consumer information from HUD-approved counseling sources prior to obtaining the loan.

I am a firm believer in education and knowledge in order to make informed decisions. Therefore, you should not go wrong with the consumer information from a HUD-approved counseling. Make sure you have studied this loan and have questions to ask the counselor. Do not go to this meeting empty-handed and unprepared.

If you are unsure where to find HUD approved counselors in your area, there are several ways you can find out. You can contact some of your local non-profit housing agencies and find out if they have HUD approved counselors that can provide information on reverse mortgages. You could also contact the Housing Counseling Clearinghouse on 1-800-569-4287 to obtain the name and telephone number of a HUD-approved counseling agency and a list of FHA approved lenders within your area.

I don’t want to overwhelm you at this point, come back next time for more information on reverse mortgages.

Taffy Wagner

To many that is what goes through their mind when they hear FHA loans referenced. This article is written directly to loan officers. If you are a consumer, fine, this will give you some insight. If you are the owner of a mortgage company, please listen in – rather read on.

My first mortgage job was with a large regional bank. I had been an agent for many years, head of real estate acquisitions for a developer, never a loan officer. The bank I was hired on to work with had a startup division in partnership with a local real estate company. The market was on fire with refinancing and they were having trouble getting experienced loan officers. This was about 20 years ago. See, refi booms are not new to the economy.

Being a team of rookie loan officers our management decided to delay our use of FHA. They wanted us to keep to the simpler products. Sadly, business was too good for them to ever introduce us to FHA, other than to embed in my memory their excuse, FHA is too difficult for you to learn now. I eventually moved from being a banker to being a mortgage broker. As many brokers do, I built my own book of business and became fairly successful and independent. Still no FHA in my knowledge base, I assumed that I didn’t need it, and thought it much too difficult to bother with.

Fortunately, I sat next to an old sage (I say that lovingly now) who kept hammering on me about the benefits of FHA. After many weeks, I let him help me. A whole new world of customer service was opened up. I could perform the No Sub Prime Miracle for people. Mind you, I hated sub prime and rarely performed it on people. I felt it was like a lobotomy, only do it rare instances. I could help people who had credit problems and bankruptcies in a shorter time frame. I could help people that didn’t have a big down payment. I could prove the credit report was wrong and still do the loan.

Up until the opening of my own mortgage company I became the FHA king. Yes, that is what the office called me. I loved it. I could make more sales, be competitive with any other product, and look like a hero to my clients. Do you think I earned referrals and repeat business?

I remind you this is for loan officers with the rest of you listening in: I challenge you and promise you. I challenge you to only work for a company that can provide you FHA as a product. I promise you it will be the most rewarding part of your practice.

Brokers that tell you the audits are too expensive and the restrictions are too much are telling you half truths. There are painful and expensive audits and there are restrictions, but if they are serious about providing you the loan officer with the tools you need, FHA frankly has to be one of them.

My first employer, was taking the easy road. The volume was almost more than they were geared up for with simple conventional refinances. The learning process for FHA would have been a piece of cake and not that different from other things I have had to learn. They would have had to have extra effort on their part and put a load on the underwriter they hired, but it could have been done. It should have been done.
To you my loan officer friends, not having FHA is forgivable, was forgivable, as I have now raised the bar for you I hope you know is now unforgivable.

Larry Cragun

If you are someone that has had a FHA Loan for a period of time, you might not have realized that you don’t have to always pay mortgage insurance premium. I remember when my husband and I first bought our house this was something we talked about. Then as time went on, we forgot about it.

I did some research and thought I would answer this question here this time. What I am about to share is food for thought. You will want to get rid of your premium mortgage insurance because it is not tax deductible, like mortgage interest. I’m always happy to receive that statement at the end of the year from our mortgage company in preparation for our taxes.

When you first purchase a home, you are looking for all the deductions you can get. True you get a lot that first year you purchase the home more than the following years, because you have points as well as mortgage interest and some other items. Let’s get back to premium mortgage insurance and when can you stop paying it.

I must share that this very question was addressed in a lot of different places. One of them being moving.com. What I liked was that the lender could not force you to keep the PMI once the loan-to-value has gone below 80%, however, the lender will not advise you when you are eligible to discontinue the coverage and stop making the mortgage insurance premium (MIP) payment. I have to say, if the lenders did contact the buyers even months or years down the road regarding discontinuing their mortgage insurance premium, what do you think the buyers would think of their loan company?

I know that I personally would be recommending that loan officer to everyone that I knew would be purchasing a house. However, it is left up to you to keep a track of what is happening with your loan. To find out where you are with your loan, take a look at your most recent mortgage statement, even if you are paying electronically. The files are usually up to date. Divide the remaining principal by the original purchase price of your home. If that number is below 80%, call the lender and find out their specific procedure for removing premium mortgage insurance.

Before you do anything, remember, remember, it is the responsibility of the buyer (you) to track the debt to value ratio and make the arrangements to stop premium mortgage insurance.

I continued researching to see if there was any more information I could share with you that would help you answer this question. When I was reading the fha.gov website it actually gave more information based on the different loan amounts. Here is what I mean, it stated it you have a mortgage that is 15 years or less and the loan to value ratio of 90% and greater, the mortgage insurance premium will be terminated when the loan to value reaches 78%, irrespective of the length of time the borrower has paid the mortgage insurance premium. I want to caution you if you have a 15 year or less term, to check with your lender as to their procedures. Because I am always hesitant when terminology like “will” gets thrown around. Sometimes they don’t follow through.

Look at your statement and see where you stand with mortgage insurance payment. You might find that you can stop at this time. Follow your lenders procedure for discontinuing.