No More Presidential Opposition to Housing Bill

July 23rd, 2008

It was reported today that President Bush has reversed his pledge to veto the Housing Bill. According to the New York Times, Secretary of the Treasury Henry Paulson is to credit for Bush’s change of heart:

But Mr. Bush set aside those objections on the advice of the Treasury secretary, Henry M. Paulson Jr., who told him that the overall package was necessary to help stabilize the housing and credit markets, according to the White House press secretary, Dana Perino, who announced the switch Wednesday morning. Ms. Perino said the gravity of the crisis, coupled with Congress’ plans to recess next week, was the reason for the reversal.

There is still a possibility that the bill will be held up in the Senate, but a huge obstacle has just been overcome.

FHA Moves To Second Phase Of Helpline For Homeowners

July 16th, 2008

The FHA is out there to help. This week, the second phase of the direct mail campaign the agency has in place will roll out. That means that some 675,000 people who are considered at risk for losing their home will get help from the agency, or at least the offer of help.

The agency will mail out thousands of letters this week to those who are going through foreclosure as well as those who are at risk for doing so, to offer help. The agency has used this method to get people back on track for their loans, and help them to avoid foreclosure. The FHA is offering a method that allows these homeowners to get into better mortgages that are safer to the homeowner (and the lender) as well as helps them to get out of the higher costing mortgages they are currently facing.

A few months ago, the organization provided the same type of help to some 280,000 people. In that batch, from February, was just the first round. They plan to help at least 850,000 homeowners by September of 2008. The letters are part of the organization’s public awareness campaign, which stresses that homeowners have options beyond foreclosure.

There has been quite a bit of talk about foreclosure being the only solution for many struggling homeowners. While many people have selected to cut their losses and run, this is highly risky. Not only do they lose any investment into their homes they have made over the last few years, but they also put themselves in a situation where they may not be able to purchase a home for some time through damaged credit and financial struggle. This FHA program is alerting those homeowners best positioned to stay in their home through new loans.

In a statement about the letters going out, the HUD Secretary Steve Preston had this to say, “This letter might be the most important piece of mail many of these families will receive this year. This information could not only help save their current home, it could help provide them with long-term financial security. This outreach campaign will ensure families are aware of the safe mortgage alternative offered by FHA.”

Who Gets The Help?

The letters being sent by the FHA are a small fraction of the help available, but those receiving the letters should take advantage of them quickly. They are headed out to those who have already faced or are currently facing their first reset of the adjustable rate mortgage they have.

If you are one of the many that will receive this letter, act on it. FHA loans are highly desirable because they are backed by the federal government, are more affordable and they are safe, unlike many of the high risk loans out there that many homeowners are struggling with currently.

At the same time, if you are unable to get the help you need, or are facing a reset of your mortgage interest rate soon, you can still get help, even if you do not receive one of these loans. The FHA is available to anyone in the United States, though there are loan requirements.

If you are interested in finding out if you qualify for FHA loans, take the first step. While the organization cannot help all borrowers, it can help those that are struggling, those getting into loans, and even some of the higher loan amounts (the FHA has been approved to lend to those homes with values up to $729,750 through the end of the year at least.)

For those that get a letter from the FHA, do not make the mistake of tossing it out. It will be the most important letter you receive.

FHA Q & A: Facing Foreclosure

June 30th, 2008

I was recently contacted by a couple asking for advice on their housing situation. Due to the recent market conditions, their house has greatly depreciated in value and their payments have become too much to handle. They are currently trying to work with their lender, but are still concerned about losing their home. What should they do?

I have a few major pieces of advice. First, contact a housing counselor immediately. Through the HOPE NOW program, housing counselors can help you figure out your options and, hopefully, avoid foreclosure. Plus, the counselors are available free of charge, so you’d be crazy not to take advantage of it. Distressed borrowers can call HOPE NOW directly at 1-888-995-HOPE (4673) to get started on the process.

Additionally, you need to stay on top of your lender. Lenders like Countrywide are already notorious for their poor customer service and are also working with many other borrowers in your exact situation. Don’t count on them to take care of things without a little pressure. Also, don’t be afraid to negotiate. When you lose your home, they lose money; so they should be willing to make concessions to keep you in your home.

Lastly, don’t count on pending legislation or litigation to save you. Although states like Illinois are pressing for restitution from Countrywide, no one should wait on a decision like that (which could take years) to be helped out with current mortgage problems.

Basically, take things into your own hands and be persistent.

The Many Benefits of FHA

June 16th, 2008

Although I primarily write about the standard FHA Home Loan, the FHA has a number of programs for helping out homeowners. One that I haven’t mentioned in awhile is the Reverse Mortgage. An article in yesterday’s Seattle P-I talked about the benefits of reverse mortgages and who they benefit most. Plus, the article details new changes that may allow more seniors to take out reverse mortgages:

Pending legislation may spur more senior homeowners to consider reverse mortgages. Those who have enough equity in their homes can qualify for loans of as much as $362,790 backed by the Federal Housing Administration. A housing bill in Congress includes a proposal to raise the payout to as much as $550,000 and eliminate the current limit of 275,000 reverse mortgages that the Department of Housing and Urban Development can insure.

As with any loan product, reverse mortgages aren’t for everyone; but if the circumstances are right, an FHA Reverse Mortgage could be a great choice for many Americans.

FHASecure: What Is It And Is It Good For You?

June 9th, 2008

As I went through a list of fabulously interesting topics to write about, I realized that FHASecure has been in the news.  FHASecure is a program put in place by the Bush Administration in August of 2007.  The program has a design to help struggling homeowners to get help in refinancing their mortgages so that they could get out of the hands of foreclosure.

The Bush Administration released information on the program last week.  They said some 200,000 homeowners have been able to refinance since the program’s startup and during that time, many of the subprime loans people could not afford refinanced into affordable home loans.  The program is not for everyone; in fact it is designed only for those that are at the bottom of the line, have subprime loans and need to refinance quickly to stay in their homes.

The FHA announced that it actually has refinanced 100,000 of those loans in the past three months (February through April.)  Struggling homeowners right now can still get this type of help.  The FHA is likely to help another 500,000 homeowners this year alone to help get out of subprime loans and into loans they keep them in their homes.

Getting Help

If you are one of the many struggling homeowners, I encourage you to reach out to the FHA representatives who have it in their ability to help many in struggling positions.  There is some controversy over who qualifies for the FHASecure program.  Originally, the program had a design to help those who were already delinquent in their subprime mortgages and were struggling with the resets of those loans.  However, some believe there has been a shift in that many of those qualifying for FHASecure are those that are trying to avoid programs and that want to get into the lower costing loan.

Some officials from HUD and the FHASecure program have said that this is a good thing in that these borrowers receiving help are a better credit risk than those already behind.

The Bush Administration announced some changes as of May 7th in the hopes of avoiding even more worry of the changing focus of the program.  The guidelines have expanded so that they now include more borrowers who are delinquent which have had a mortgage reset recently and have missed their payments due to it.

Other requirements also have had introduction in the way of late payments on record.  Those homeowners with a Loan to Value ratio that is 90 percent or less will be able to have a 90-day late payment on their record prior to the rate reset and can still qualify for FHASecure.  In the past, this wasn’t clearly outlined.  Additionally, all borrowers behind on their mortgage payments and that have reset adjustable rate mortgages and have a 60 day late payment on their record are also still able to qualify.

What To Do

If you are struggling with your subprime loan, for any reason, or believe you will be struggling for it in the short term, the FHASecure program may be able to help you.  Talk to lenders to find out what can be done to keep you from falling behind.  While the government is working to include more homeowners that are on the verge of missing payments and entering foreclosure, they are still heavily working to improve the situation for those that have already had resets of their loans.

Of course, FHASecure has a long way to go, and it most definitely can be helpful to some.  For other homebuyers, it may be possible to refinance into a standard new FHA loan through a standard lender.

FHA Loan Holders Get Relief From Destruction

June 6th, 2008

In recent weeks, there has been a lot of destruction.  Much of the south and central portions of the country have been ripped apart by devastating tornados.  Floods, hurricanes, earthquakes and terrifying thunderstorms have left a path of destruction across much of the country.  Homeowners are barely able to find shelter and yet many are fearful of what will happen to their home’s mortgage.

For many people who have FHA insured loans, there is some relief available.  According to the guidelines of most FHA loans, the lenders are not able to press you for payment in such circumstances.  They cannot file for foreclosure on your home until a fully 90 days has past.  This gives you time to get things back into place, at least financially speaking, or to find another option.

If your home had damage or destruction, this type of FHA loan backing can be quite helpful (perhaps yet, another reason to consider FHA loans over other types whenever you qualify.)  Now, not all thunderstorms will qualify for this type of help.  It is meant to be in use in only a handful of the worst situations.  Areas that the President has declared to be a disaster area are those that will qualify for this relief.

In addition to this, if your place of employment has been damaged or destroyed at the hands of such weather occurrences or manmade events (like wildfire for example) you too may qualify for such protections even if your home hasn’t been damaged at all.

The FHA insurance on your home is there to help protect you from losing your home, but you still need to talk with your lenders and get into the necessary programs.  Because most lenders are more than willing to keep a good paying customer in their current mortgage, they are likely to have some solution for you.  This can drastically help them save you as a customer and the FHA programs are there to help provide reassurance.

If you believe you may qualify for this type of backing, contact your lender today.  Find out if your particular situation qualifies.  You can also contact your local HUD offices to learn more about the help that is available to you here.  Chances are, there is protection available o you through your FHA loan.

Calculating Your FHA Loan

May 8th, 2008

We all know the importance of being informed before taking out any loan, and as more and more people take out FHA Loans it’s critical to understand your obligations before starting the process. A simple way to do this is by using a mortgage calculator. One of these such tools can be found at the Mortgage Loan Place website. You plug in your information and the calculator provides an estimate of the loan amount you could be approved for and your monthly payments. The information to be plugged in includes:

  • Yearly Salary
  • Other Income
  • Property Tax
  • Hazard Insurance
  • Monthly Auto Payment
  • Credit Cards and Other Payments
  • The Calculator already has the Loan Term (30) and Interest Rate (6) plugged in, but these can be changed to fit your plans. Tools like this one are a great way of understanding what you can expect before starting the FHA lending process.

    FHA Mortgage Center Loan Glossary

    April 25th, 2008

    We decided to create a loan glossary to help everyone learn more about mortgages.  It’s a work in progress, we only have  a, b, c, d, e, f, and g finished, but the rest are coming soon.  The rest of the glossary is being written so please check back soon.  Let us know if you see any errors.

    Home Ownership Hardship

    March 27th, 2008

    There is so much going on in the housing industry that it is time for me to catch up so that our readers will not feel as if we have forgotten about them. It appears that every day for the last few weeks that I have been slammed with various projects, more and more has happened in the housing industry on many levels. I want to almost dedicate this first blog to those who are homeowners that are facing hardships. You have to understand when things begin to get tough; you might not believe you have anyone that you can reach out to. It is not true.

    First and foremost, do not let your pride keep you from seeking help or answers because you think no one will understand. What I am about to share is something that I am hearing too often and it sickens me to think that people are this callous when it comes to someone asking for help. Let me explain what I mean. I have heard more than once of a person who knows they are going to have a few difficult months contacting their mortgage company saying I am going to have a few difficult months and I want to be able to pay a partial payment because I know that I am not able to make the full payment. Is there anything you can do to work with me? Then the person at the mortgage company basically saying, we cannot help you out.

    Is it me or is some money better than no money? Instead since the customer believes they are no better off, they end up not making any payment because the mortgage company will not work with them and they are on the verge of foreclosure. What happened to working with the customer instead of being part of the problem? If the person did not contact the mortgage company and things started happening, I would be of the mindset maybe something is happening. In the above situation, the customer (who has had a perfect on-time record) of paying their mortgage payment contacted to say I know there is a situation can you help. What good does it serve a mortgage company to be cold-hearted?

    When this family is facing foreclosure, you better believe they will share the story of how they contacted their mortgage company and they turned their back on them. They became more of the problem instead of being a part of the solution. Imagine if the mortgage company had said, yes here is what we can do to work with you. Would this client be telling everyone they know about how their mortgage company became an ally versus an enemy? With a move like they made, they became an enemy. Only thinking of themselves and not looking at the overall picture.

    This truly saddens me that this is happening to people all over the United States because no doubt it is. Hmmm maybe we should stop and look at the ones that are under investigation and maybe this is part of the reason. I encourage you if you are in a situation and have contacted your mortgage company and the person on the other end seems to be a roadblock, keep calling until you get someone that will listen and take action on your behalf.

    Dr. Taffy Wagner

    Tightening the Reins on Mortgage Lending

    March 17th, 2008

    Is this supposed to be a surprise to anyone seeking to get a loan in this housing market? Seriously because almost day after day we are reading increasing stories on the number of foreclosures, the mortgage rate and even lenders. Maybe the actual fact the guidelines are being tightened is not a surprise but what they are saying is. I must admit I was stunned to find out this was happening.
    I read a story that came out of Ohio that shared how the guidelines are being tightened on mortgage lending. It shared that basically due to the sharp increase in foreclosures nationwide, Fannie and Freddie are implementing tighter underwriting guidelines on approving a family for a home loan. Some changes are significant and have begun to take lenders, real estate agents and prospective homeowners by surprise.
    I want to share a few of these that I know will affect homeowners: one of the biggies I would believe would be the Appraisal Guidelines. Why, because with the market being soft there is not in my opinion any way that your home could appraise at the same value today in 2008 that it might have appraised for at the end of 2006 or beginning of 2007, especially with homes in your neighborhood or area that have been foreclosed on. Foreclosure affects home owners that are not facing foreclosure because the number of foreclosures in the neighborhood brings down property value.

    I remember when we were selling our home, we had the standard walk through appraisal. Now it seems, in addition to the standard walk through appraisals by a licensed appraiser, lenders now are requiring an automated valuation model which is statistical data from all the real estate sales that have taken place in that specific area. The rule now says whichever value comes in less will be the true market value. It goes on even further to say if the assigned appraiser declares your home to be in a declining market or should the new automated underwriting track your property as an area deemed to be in a declining area, the buyer cannot get 100 percent financing. I know that will affect some people.
    We know that one of my favorite subjects is credit. Apparently it is one of the topics of discussion here as well.

    From what I can gather, Fannie Mae and Freddie Mac’s major changes take place in March 2008 affecting how conforming mortgages are priced with an interest rate. The new guideline will (not optional) require lenders to review credit scores and down payment information before a mortgage rate can be offered. New interest rate adjustments will apply to high loan to value, low scores, cash out refinances and investment properties. Once again, credit score is important. A point that I found interesting was at the end of this story it said these changes have not affected programs from The Federal Housing Administration. In an FHA mortgage loan, the mortgage insurance is provided by the borrower and included in the loan. As I have said in previous blogs, do your research. Talk to a lender and see what your options are. If you are strictly seeking an FHA Loan, know that all lenders are not FHA approved. I cannot stress doing your due diligence enough.

    Dr. Taffy Wagner