In the recent news is a lot of information about the subprime markets, the worries about foreclosure, but if you are current on your mortgage or have less than perfect credit and want to buy a home, where does that leave you?

I admit, the news of late especially with Congress trying to pass a bill to help move the housing market along is interesting and it has consumed some of the headlines. However, let us not forget that we are moving into the largest house buying time of the year: spring and summer. People move much more often in the summer months mainly because the weather is nice and the kids are out of school. If you are considering it, you may be consumed with worry about your less than perfect credit.

The housing market “crash” and the “credit crunch” are worrying plenty of people who want to be in a home. Some are staying in rental opportunities longer now than they would have just a few years ago. That may not be necessary. In fact, there are some outstanding opportunities for people to get into homes right now.

Avoid Subprime

With the fall of the subprime lenders, you will find it more difficult than ever to find a lender willing to loan to someone that has a low credit score. Rightly, so some people with credit scores that are too low will not be able to find any type of lending opportunity even from the FHA. Yet others, who will fall somewhere in the middle may find a lender.

FHA is able to help those with spotty credit scores to get into a home. They offer loans that do help consumers working on improving their credit, with proven income and employment. There is no doubt that you may pay a bit more for a loan this way through some lenders, yet the FHA programs do offer help to those looking for a way to prove themselves.

You will need to prove yourself to the Federal Housing Administration, though. To have approval for an FHA loan, you will need to provide details of your income, back records, paycheck stubs and anything else that can prove that you are a viable applicant. The FHA is not in the business to secure too risky loans, and these checks help to insure that is the case.

Is This New?

You may believe that this is something new that the FHA programs are doing. That is not the case. In fact, the FHA has a strong history of stepping up to the plate whenever there is a housing scare in which lenders are no longer willing to provide as flexible of loans as they used to.

An example of this happened in a recession during the 1980’s when many of the Texan housing markets fell drastically because of the oil situations there. While lenders reigned in their lending abilities or willingness, the FHA stepped right in to help stabilize the industry. In fact, the very foundation of the FHA is that of helping to establish home ownership in the United States (it was created during the Great Depression to help people buy homes.)

I highly recommend if you are in a situation where you have a good income history and can afford a mortgage, but are worried about shaky lenders, to use the FHA to help you get the home you want. You do not have to wait for a better market, especially when a number of opportunities like low priced homes are available. While the FHA cannot help everyone searching for a home with bad credit, it is able to help many that need and deserve an opportunity.

While I was perusing Google for the latest FHA information, an article that mentioned reverse mortgage scams caught my eye. Although this particular article had very limited information, I did a little digging and found an excellent article for avoiding reverse mortgage scams by Tim Paul at Ezine Articles. The 5 scams he details are:

He gives a thorough description of each scam, including media reports of specific instances, and offers precautions for each situation. The article is a few years old, but it is just as relevant as if it had been written today.

I was shocked to hear that a public service announcement was in use as a way of letting people know that it is illegal to discriminate against others who want to borrow money to buy a home. Really, this is 2008 and perhaps it is a bit naive to think that this is something that is finished. The fact is, the law is clear. You should not be discriminated against for any reason, especially your race, your religion, your familial status, your national original, your color or a disability.
What Is That About?

HUD announced that it was putting in place a public service announcement that would begin airing throughout the country on television as well as radio. The goal is to educate minorities of their right to own a home. According to the official press release out of the U. S. Department of Housing and Urban Development, the service announcement will feel Denis Haysbert, who you may know better as President Palmer on the television show “24.”

Here’s how the public service announcement will play out, according to the press release, “The PSA shows Haysbert, sitting in a café, drawing his dream home on a napkin and explaining that it is illegal to discriminate in lending because of someone’s race, color, national origin, religion, sex, familial status, or disability. The PSA ends with the tagline “HUD – One Call. Many Answers,” and encourages people to call HUD’s fair housing hotline, 1 (800) 669-9777, or log onto HUD’s Web site, www.hud.gov/fairhousing, if they believe they have experienced lending discrimination. “

Discrimination in Lending

If you feel that you have been discriminated against, now is the ideal time to step up. Even more so, if you feel that your lender is not doing enough to help you get into the right mortgage for you, I urge you to take action. FHA is an ideal program for those that are low income but able to make home mortgage payments. It is also an ideal way to get out of those subprime loans.

According to the press release, African Americans and Hispanics receive less information regarding the loan terms as well as often charged a higher fee. They are often told not to apply for the loan. Legally, it is unlawful to do these things. If they are happening to you, the Fair Housing Assistance Program can help you. You can contact them at 800 669-9777.

If you are struggling with a lender, give them a call. Alternatively, contact a lender that is willing to work with you. While there is discrimination out there, it does not come from all lenders.

Recently HOPE NOW has taken a number of steps to increase the program’s effectiveness. Along with an improved website and upgrades to the program, HOPE NOW is running an advertisement on television. The commercial features a young girl packing up a doll house when her mother enters the doorway, surrounded by boxes, telling her its time to go. The voice over tells viewers that the effects of foreclosures go beyond just the homeowner and gives the HOPE NOW phone number (1.888.995.HOPE). It’s good to see that more is being done to get the word out to homeowners in distress.

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.

FHA expert Peter G. Miller offers his analysis of the WSJ’s recent features about FHA Loans. Specifically he addresses a critical aspect that the Wall Street Journal has omitted from its series:

This is great stuff but it never quite gets to an important point: There was no FHA mortgage meltdown.

Fewer FHA loans, yes — after all, how could the staid, old-fashioned FHA program compete with mortgages which required nothing down and little meaningful financial disclosure.

But an FHA meltdown? Didn’t happen.

By sticking to its standards, the FHA has been an oasis of financial sanity.

Miller’s FHA insights tend to be spot on and this is no exception. Maybe the WSJ will take note and add an article on this topic to their growing archive.

Markham Lee over at SeekingAlpha.com takes a look at the WSJ’s graphs in their article about the problems with DPAs, which I wrote about the other day. Lee is not totally opposed to DPAs but stresses that down payment assistance should only be used to support “financially stable home ownership.” His analysis:

To be clear, I’m not against the program, provided it’s putting people into a strong, stable financial situation, and if the default rates are only slightly higher than those for regular FHA loans. The key is to set higher standards and aim to help people get ahead financially, instead of having them fiscally limp into home ownership. For example: instead of providing down payment assistance for people who can barely afford to make ends meet, provide it for those who will have enough savings for 3-6 months expenses (after they buy the house) if they receive help with the down payment.

Although I’m against DPAs, I don’t think they will be completely eliminated. I do think that if the powers-that-be take Lee’s attitude towards reforming down payment assistance they could serve their intended purpose and get deserving individuals in homes.

The worry that many people have, that I have encountered, is that now is the worst time to get into a home. It is not. Now, that has not to say that it is the best time either. There are opportunities in the housing market and with the approval of FHA loans even more readily available, it makes sense that more people than ever would be interested in getting loans. Those that are leery are the people who are worried about mortgage lenders going under or not qualifying for the loan. Let us look at the advantages.

I was recently asked, “Isn’t the mortgage industry too shaky to get into? I don’t want a lender to drop out of my loan if I buy now.” They went on to tell me that they planned to hold off buying until the real estate market improved. It stepped back, looked dumbfounded for a second, and then explained a few pointers.

First, the risks in the current housing market are not necessarily in the lenders themselves. While some of the bigger companies who did a lot of lending through subprime loans are shaking, it is highly unlikely that they will pull all mortgage notes they have. More than likely, they would be sold to another lender. However, that is not the risks with these two friends of mine.

You see, they have decent credit and after getting married a year ago, have managed to get a sizable down payment together for a home. They are worried about all mortgage lenders. Most lenders are suffering from the housing crisis, but they are not going out of business. In addition, what they know and you should know is that once the housing market straightens out and house values start coming up (which most experts believe will happen towards the end of 2008 and the beginning of 2009) the long-term outlook looks good.

Since this particular couple is looking for a family home and doesn’t plan to move too much, chances are they can get a pretty low priced home now and watch the property value rise on it over the next five, ten or even thirty years. It may not be the best time for short-term loans, granted, especially in areas where house prices are dropping by 10 to 15 percent. However, it is an ideal time for many others.

If you are not sure if now is the right time for you to purchase a home, I highly recommend that you talk about FHA loans to your lenders. These are backed and secure loans, ideal for many homebuyers.

In addition to several other suits against Countrywide Financial, the state of Illinois is now suing Countrywide and its top executives. According to today’s article in the NY Times:

The civil lawsuit asks for an unspecified amount of monetary damages and requests that the court require Countrywide to rescind or reform all the questionable loans it sold from 2004 through the present. The attorney general, Lisa Madigan, also asked that Mr. Mozilo contribute personally to the damages and that the court give her office 90 days to review loans serviced by Countrywide that were in foreclosure or soon would be.

“People were put into loans they did not understand, could not afford and could not get out of,” Ms. Madigan said. “This mounting disaster has had an impact on individual homeowners statewide and is having an impact on the global economy. It is all from the greed of people like Angelo Mozilo.”

The lawsuit adds to the considerable legal risks facing Bank of America as it prepares to absorb Countrywide in a takeover announced in January. Countrywide and its executives have been named as defendants in shareholder lawsuits, and the company’s practices are the subject of investigations by the Securities and Exchange Commission, the F.B.I. and the Federal Trade Commission, which oversees loan servicing companies.

I fully support the decision of the state’s attorney general to not only go after the company as a whole, but the money grubbing executives as well. It is high time that those in big business start treating their customers with some respect. Here’s hoping that this case will help the many people in Illinois who have suffered because of Countrywide’s predatory practices.

When it comes to finding FHA news articles, the Wall Street Journal seems to be becoming my new Seattle P-I or CNNMoney.com. The WSJ had another FHA article today, this time focusing specifically on the risks of putting zero down on a home. The article, which has an accompanying blog post, focuses on the reasons why eliminating DPA could be critical to the survival of FHA, and the response from the DPAs and other supporters, particularly those who are closely tied to minority and poverty issues. Others feel that the programs need to be changed, but not eliminated:

Seller-funded groups and supporters in Congress say that such programs should be regulated but not shut down, a proposal that HUD hasn’t shown much interest in in recent years. “If there’s a problem, let’s fix it,” says Rep. Gary Miller (R., Calif.), a vocal defender of the program and a former home builder and developer.

Whether or not DPAs will go away, the article concludes with a sure bet:

Rep. Frank said in an interview that he believed a compromise could be reached with the Senate that would preserve the program but with tougher lending requirements. “No one is talking about leaving it untouched,” he says.