FHA mortgage lending continues to play a major role in home financing and refinancing for the American homeowners. The state of FHA lending remains positive as the loan defaults are declining and interest rates remain more affordable than any other time in deades.
|The Department of Housing and Urban Development spokesman Lemar Wooley said in a recent interview with NPR that FHA paid about $12.8 billion on almost 100,000 such claims on foreclosed homes in 2010. The average FHA mortgage was $128,000 per claim. In 2009 FHA paid on 70,000 claims at an average cost per FHA loan was $117,000 totaling almost $8.2 billion.
Will FHA mortgage loan originations rise in 2011? Most analysts believe that FHA loan originations will decline because rates are predicted to rise. However, the popularity of FHA lending should continue to increase.
It is no secret that FHA home mortgages have become very popular since the mortgage industry crashed in 2006. Since then FHA mortgage lending has increased about 30% of the total mortgage market-share. FHA lending continues to have a lower foreclosure rate than conventional mortgages. At the end of the 3rd quarter of 2010, the foreclosure rate for all home mortgages was 4.39% compared to 3.32% for FHA mortgage loans. FHA rates remain extremely low and the cost for FHA refinancing continues to be less than conventional lending.
Bank of America closed their wholesale mortgage lending leaving many FHA lenders and brokers pondering their next step. BofA eliminated mortgage broker access to their FHA loan programs including FHA mortgages. Remember that Bank of America Home Loans abandoned wholesale lending back in 2007, but resumed following their purchase of Countrywide Home Loans. Once again the lending giant has quit wholesale mortgage business.
Other banks have made a similar decision, citing the greater likelihood of broker-originated loans to end up in default. Studies indicate that home loans originated by a bank employee have less of a chance of defaulting based on several other published lender reviews. According to BofA president Doug Jones, “Bank of America remains committed to purchasing and financing FHA home loans from Correspondent Lending companies, including those approved to originate loans from mortgage lenders.” FHA loan rates continue to fall to record levels, so most people in the mortgage industry still consider FHA mortgage lending a significant opportunity looking ahead to loan business in 2011 and 2012.
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FHA has been in the news a lot lately. Yes, FHA mortgage rates are low, but the FHA mortgage program as a whole may be in jeopardy of existence. Many FHA blogs have posed the reality that FHA financing is at serious risk to be shut down. In this political climate it becomes obvious that anything is possible because Congress must pass bills to continue to fund the FHA mortgage programs. FHA first time home buyer loans have been promoting home ownership since the great depression. Even as we discuss their recent failures, the argument could be made that FHA is one of the most successful government initiative in the last century. Read the original article > Is FHA Mortgage Financing in Trouble?
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In a recent article, FHA Home Loan Refinancing posted an interesting perspective of FHA’s future. The FHA loan publisher considers the risks that FHA lenders pose in addition to each FHA loan program as well. The article reviews the following FHA programs: cash out refinance, FHA streamline, and the infamous, FHA home purchase product. They noted that the FHA Commissioner and HUD had tightened the FHA guidelines for the streamline by not allowing borrowers to finance the lender closing costs. When borrowers come out of pocket to pay their closing costs you can bet they are less likely to default on the loan. Read the original article online at > Are FHA Home Loan Programs at Risk?
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The Mortgage Bankers Association reported that FHA rates should remain affordable in the near future because of concerns in Europe financial problems, but they predict rate hikes in 2011. Most real estate financial advisors agree that low FHA rates are helping the local housing communities recover. Once again HUD has come down hard on FHA lenders over fraud and disclosure negligence. FHA commissioner David Stevens stated in a MBA meeting, “This is a mortgage market surviving purely on life support and sustained by the federal government.” Stevens continued his theme of FHA mortgage reform and made an effort to persuade FHA mortgage lenders to sacrifice the commissions at this time for the good of the industry.
The government agency tightened FHA loan requirements with amendments on the FHA guidelines making qualifying more challenging for new home buyers. Read the original FHA loan article online at > Home Buying Opportunities with Declining FHA Loan Rates
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FHA mortgage refinancing has risen as a preferred FHA lending option for borrowers with good and bad credit. In the last few years, FHA refinance loans have become a popular option because the FHA rates are low and the credit guidelines are more forgiving than conforming lending guidelines.
Talk to a licensed FHA professional about your qualifications and see if FHA is a good fit for refinancing your mortgage. Read the entire FHA refinance article online. In the last 3 years, FHA refinance loans have increased their market-share for home loans nationwide.
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House and Senate appropriators are increasing the FHA funding for the Department of Housing and Urban Development. The government approved the increase of funding to prevent mortgage fraud, update its technology while increasing FHA mortgage lending capacity to $400 billion! Read more at http://twitter.com/FHAhomeloanco.
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FHA has not been immune to mortgage loan defaults, late payments and foreclosures. FHA loan programs have supported a majority of home financing portfolios for purchase and refinancing. The FHA is also in need of additional capital after an actuarial report found the agency’s secondary reserves have fallen below the required 2%, to 0.53%, as losses from borrower defaults rose. The housing agency insures nearly 30% of all purchase mortgages and 20 % of refinanced loans, according to HUD Secretary Shaun Donovan.
The proposed FHA lending changes or new FHA guidelines include:
* HUD will increase “up front” cash required on a home purchase loans, giving the buyer more “skin-in-the-game.” FHA said it can tap several options, and analysts say it will mean some increase to the current minimum down payment of 3.5%. About 31% of purchase loans done in the first eight months of 2009 had the maximum 96.5% loan-to-value. Another 55% had 95% to 96.5% LTVs for FHA mortgage options.
* The FHA will raise the minimum credit score for new borrowers. The FHA has yet to determine the minimum “FICO” and may factor in the down payment.
* HUD will increase compliance and hold FHA lenders accountable for losses associated with loans that do not meet FHA standards. As of Dec. 8, the FHA this year has suspended eight lenders and withdrawn approvals for 270 others.
* HUD might increase the 1.75% up-front premium and/or annual mortgage premiums. It is asking Congress to raise annual premiums since that would raise capital with the lowest borrower impact, Donovan said.
* HUD cut allowable seller concessions to 3 % from 6 % in a move to limit incentives to inflate appraised values. The move reduces the money the seller can contribute to a buyer’s closing costs, discount points and other concessions without impacting the buyer’s mortgage.
* It will boost enforcement and hold FHA lenders accountable for losses associated with loans that do not meet FHA requirements. As of December 8th, the FHA this year has suspended eight lenders and withdrawn approvals for 270 others.