I came across an article by Kenneth Harney of the San Francisco Chronicle that perfectly assesses the FHA situation today. Harney takes a brief and sensible look at what good, the bad, and the ugly when it comes to the facts about FHA and subprime loans. Although Mr. Harney sees FHA as an excellent alternative, he doesn’t sugar coat things. A difference he neutrally points out is about income statements:

Additional differences between FHA mortgages and subprime: You can’t just “state” your income and get a loan. You’ve got to show proof that you earn what you say. The FHA never has offered “payment option” plans that allow borrowers to send in almost nothing while adding to their debt through negative amortization.

He doesn’t classify it as a pro or a con, just a fact. This, of course, got me thinking, “Is it a pro or a con?” After some deep thinking and half of a turkey sandwich I decided on “Pro.” Yes, it is a bit of a hassle, but the FHA is looking out for everyone’s interests. They want to give you the largest mortgage you can afford and make sure you don’t end up over your head. These days, with many subprime lenders being characterized as vultures, the FHA is a borrower’s guardian angel.

This entry was posted on Monday, May 21st, 2007 at 10:37 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.