FHA News

May28

topic Posted by The Upfront Mortgage Broker in Florida

– Posted by The Florida Upfront Mortgage Broker

The Bush administration opposes the expansion of Federal Housing Administration loan guarantees put forward in March by Rep. Barney Frank, D-Mass., as a “bailout” of lenders and speculators.

Rep. Barney Frank has maintained that the program would not constitute a bailout because it would mostly be financed by insurance premiums borrowers pay to the FHA, and only owner-occupied homes would be eligible for government-backed refinance loans.

In addition, lenders would have to accept a maximum 85 percent of a property’s current appraised value as payment on an existing loan to participate, and borrowers would have to pay the government an exit fee to prevent them from flipping their home at a profit if housing prices rebound.

The House incorporated the language of a previously approved FHA modernization bill into the Act, HR 1852, which would increase the maximum amount for loans eligible for FHA backing in high-cost areas to up to 175 percent of the $417,000 conforming loan limit ($729,750) or 125 percent of an area’s median home price, whichever is less.

A temporary increase in the conforming loan limit — up to $729,750 in high cost areas — was scheduled to expire at the end of the year. The legislation approved by the House Thursday would make the increase permanent. The upper limit for loans eligible for purchase or guarantee by Fannie and Freddie would be 125 percent of the median home price in high cost areas, up to 175 percent of the conforming loan limit ($729,750).

The House also threw in a first-time home-buyer tax credit of up to $7,500 for individuals who earn less than $70,000 a year, or up to $140,000 for married couples, that’s supported by the industry.

“The tax credit is the most effective way to halt the downward spiral in the housing market and stabilize home prices and financial markets,” said NAHB President Sandy Dunn, president of the National Association of Home Builders, in a statement. “This will get consumers off the fence, stimulate home buying and reduce excess supply in housing markets.”

The House bill — technically an amendment to The Foreclosure Prevention Act of 2008, a tax relief bill passed by the Senate April 10 — also includes language that’s intended to protect loan servicers who engage in workouts with troubled borrowers from lawsuits by investors in mortgage-backed securities. The Senate’s bill was, in turn, an amendment to a bill originally put forward in the House, HR 3221.

It’s my belief that everything being done is a little too late as well as not enough. If it weren’t for housing losing its value, there could have been more done. Housing’s depreciation has been the biggest factor in this mortgage downturn.

The Florida Upfront Mortgage Broker

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topic Topic: FHA/VA, Residential Mortgage articles |

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4 Comments, Comment or Ping

Mortgage Sarasota

1

I agree that they are a bit too late on some policies, but on the other hand, from a long term perspective… we really needed house prices to come down anyway. 30%+ annual appreciation was not sustainable, and for the most part out of control. Once this crisis is over it should put things back where they should be and make owning a home affordable for the masses once again.

The real trouble is that lenders do not have the liquidity to lend and they are unable to offer enough products to cater to the large potential buyer pool. Only FHA qualifying buyers can purchase a home right now, so the problem is that the housing prices are dropping in effort to attract that small percentage of buyers who can actually qualify. These buyers know they have the advantage.

Its a supply and demand issue at its extreme… in 2005 there was more buyer demand then supply of houses, and now there are more homes for sale then available qualified buyers.

There has to be a point of equalibreum before this can be corrected… and I feel that we are headed for more troubled times before this really shakes out.

May 28th, 2008
Joe Bartolotta

2

John,

I couldn’t agree more with the need for housing to be more affordable for the masses. I politely disagree with more troubled times though, I feel that we are beginning to see an end to the foreclosure crisis and as long as rates stay relatively low, buyers will buy. I think the next 3-4 months will be a critical area and IF more homes start to sell AND less homes enter the market, the media will finally preach that there may be light at the end of the tunnel. We need to have a great summer buying season in order for the media to jump on the bandwagon.

Thanks for the comment.

Respectfully,
Joe Bartolotta
The Upfront Mortgage Broker

May 29th, 2008
One Ford Road

3

Housing really does need to become more affordable for the masses, otherwise we are all going to be homeless!

Amanda <3

Jun 4th, 2008
Jason Mitchell

4

Joe,

Thank you for providing this helpful information. Your blog is an excellent source of mortgage news and advice.

Jason – Thanks for the kind words, I appreciate it. Feel free to sign up for my RSS feed to get the latest post delivered to your reader or sign up by email to receive my post through email.

Jul 16th, 2008