Posts Tagged ‘loans’
Should FHA home loans be more expensive?
Last Updated on Thursday, 21 October 2010 10:05 Written by admin Thursday, 21 October 2010 10:05
Should FHA home loans be more expensive?
Should FHA home loans be more expensive?
The federal FHA mortgage insurer’s reserve fund has slipped below its mandated minimum. Now the FHA and some lawmakers want to raise the minimum requirements-
FHA loan Advantages Include:
Minimal Down Payment and Closing Costs.
Down payment less than 3.5% of Sales Price Gift for down payment and closing costs allowed. No reserves or required. FHA regulated closing costs. Seller can credit up to 6% of sales price towards buyers costs.
Easier Credit Qualifying Guidelines such as:
Minimum FICO credit score of 540. FHA will allow a home purchase 2 years after a Bankruptcy. FHA will allow a home purchase 3 years after a Foreclosure.
Easier Debt Ratio & Job Requirement Guidelines such as:
Higher Debt Ratio’s than other home loan programs. Less than two years on the job is allowed. Self-Employed individuals o.k.
Should it be more expensive to get a FHA mortgage insured by the Federal Housing Administration?
That is the question the House Financial Services Committee examined on Wednesday afternoon.
Currently, FHA home loans comprise more than 30% of the entire mortgage loan market. But as some of those FHA insured loans have defaulted, the FHA mortgage loan-guarantee fund has slipped below the Congressionally mandated 2% level. As a result, some lawmakers are suggesting that FHA mortgages need to be more expensive to obtain.
In fact, a House bill, the FHA Taxpayer Protection Act of 2009, would increase the FHA loan minimum down payment required to obtain an FHA loan to 5% from 3.5%. That, sponsor Rep. Scott Garrett, R, N.J., believes, would make FHA mortgage applicants more committed to maintaining their FHA home loans.
Almost 90% of FHA mortgage loans issued between January and August 2009 had FHA Home loan-to-value (LTV) ratios of 96 or higher, according to written testimony from Robert Story, chairman of the FHA Mortgage Bankers Association. That amounts to a very small commitment on the parts of FHA mortgage applicants.
Housing and Urban Development secretary Shaun Donovan’s testimony said he is committed to raising the expense of utilizing FHA mortgage loans, though the agency and is still exploring the best options and doesn’t necessarily support raising the FHA down payment requirement.
“We have made the decision to exercise our authority to increase FHA’s up-front cash requirement that a borrower has to bring to the table in an FHA insured home loan — to make sure that FHA mortgage applicants have more ‘skin in the game’ and a stronger equity position in their FHA home loan,” he said.
Still, he added, “FHA is not ‘the next subprime’ as some have suggested.”
He disputed Garrett’s statistics that tried to make the case for increasing down payments. Garrett said that FHA home loans with loan-to-value ratios of 100 were twice as likely to fail as those with LTVs of 95.
Donovan responded that many of those failed 100 LTV loans involved seller-supported down payment programs, which contributed disproportionately to delinquencies. Last year Congress prohibited those FHA mortgage programs.
Donovan outlined three options for raising FHA borrowers’ skin in the game:
Increase the down payment requirement, currently at a minimum of 3.5%; Raise the up front premium insurance premium from 1.75% to as much as 3%, which the FHA already has the authority to do; and Decrease the allowable seller concessions for closing costs, which are now 6%, to 3%.
Critics of increasing the up front borrowing costs claim it’s both unnecessary and could imperil the weak housing market recovery.
“While the FHA mortgage program is experiencing shortfalls in its excess reserves due to our economic crisis, The FHA mortgage remains financially strong and a critical part of our nation’s economic recovery,” said Vicki Cox Colder, president of the National Association of Realtors, in her written testimony before the committee.
Besides, she added, “It is important to recognize that this is not FHA’s only reserve fund. FHA also has a Financing Account separate from the Capital Reserve. FHA’s actual total reserves are higher than they have ever been with combined assets of .4 billion. This is an increase of 13% over the previous year.”
Donovan acknowledged problems at FHA, including antiquated systems and equipment and inadequate personnel numbers.
“Little of this may have been obvious when FHA’s mortgage market share was 3% as recently as 2006,” he said in his statement. “But when our mortgage markets collapsed last fall, and homebuyers increasingly turned to the FHA home loans for help, the potential consequences of these lapses in risk management became very clear.”
The agency has acted to lower risk over the past several months. It hired a chief risk officer to improve risk assessment; increased enforcement efforts that resulted in suspending some FHA mortgage lenders and withdrawing FHA-approval for many others; and strengthened underwriting, including instituting FHA loan procedures that should improve appraisal accuracy.
“Charging more [for those with lower FICO scores] is not necessarily the answer,” said the HUD secretary. “It could even work against it by making it harder for FHA mortgage applicants to pay off their FHA home loans.”
Besides that, Donovan expressed a real reluctance for the idea of FHA mortgage loans becoming an even bigger player in the FHA mortgage market than it is now. Raising prices for borrowers with low FICO scores and lowering them for those with high scores could put the FHA in direct competition with private FHA mortgage lenders for the lower risk borrowers.
FHA -loan risk has also declined, some industry analysts believe, thanks to the drastic improvement in the quality of borrowers it services. According to Keith Gumbinger of HSH Associates, a publisher of mortgage industry information, their average credit score has jumped to 693 from the low 600s two years ago.
Janis Bowdler, a director for the National Council of La Raza, a Hispanic civil rights organization, said, “According to the FHA, had loans not been made using seller down payment assistance programs, known for being a haven for fraud and abuse, its capital reserve ratio would still be at the recommended 2%.”
She emphasized how important affordable FHA loans are to the minority community, which accounts for a much larger share of these mortgages than the greater mortgage market.
Ann Schnare, a partner with Empiris, an economic consulting firm and a veteran mortgage industry figure, said she thinks the agency could take a few small steps, like increasing the down payment requirement, to ensure the account’s viability.
“While FHA mortgage are required to put 3.5% down, they are also allowed to finance the up-front premium and a portion of their closing costs,” she said. “The net result is that many FHA borrowers are in a zero or even negative equity position the moment they move into their homes. This dramatically increases the risk of foreclosure, particularly in a bad economic environment and a weak or declining housing market.”
She also recommends an slight increase in monthly insurance premiums to build up the reserve fund.
Donovan said stepped up enforcement itself could help restore the Capital Reserve Account. Most of the projected losses over the next five years, 71%, will come from loans already on the books. Many of those loans were of poor quality due to negligence on the part of lenders.
HUD Secretary Shaun Donovan on what can be done to clean up the foreclosure mess.
Related Shaun Donovan Articles
Is A Quick Loan The Best Answer For Me?
Last Updated on Thursday, 14 October 2010 07:25 Written by Vivian Summers Thursday, 14 October 2010 07:25
There are numerous online fast loan providers and they have different means of operating. There are generally sure to be folks who have traded with them previously. You will do well to link with these guys and discover the way in which the organization does business. If you do not like it, walk away. No matter how juicy their conditions might be, not all of these folks may be trusted. Hence, indeed, go along with your intuition that tells you something may possibly be wrong.
You do get these money needs also, do you not? All that vehicle repairing, coping with big and minor accidents, and all. Fortunately you can access a rapidly loan to help in such situations. You understand that nothing could be better for you. Nevertheless you ought to be careful not to get into trouble by using such loans.
Circumstances may become very quickly challenging by using a fast loan lender whom you have not adequately examined. If it takes you longer to learn about them than to actually process the funds, it’s still worth the hassle.
If you invest the time to do your research, you’ll be far better as a result it, at the end of the day. As they claim, the end will justify the means for you, if you do your required research. And no, no amount of knowledge acquired is ever wasted. The more you learn about anything, the more you know and the more likely that you will avoid getting into any problems with loan sharks. If you know anything about these types of loan sharks then you know they are not good to deal with at all.
By just filling an application form online, you realize you can access a quick loan. Amusing enough, the forms typically are not actually a lot of trouble. In essence, as soon as you give them all the information they require, they process your request and subsequently send you the money. Consequently, it’s now a far lot less complicated and quicker than was the situation before the introduction of the Net.
Understanding The Benefits Of A Payday Loan
Last Updated on Friday, 15 October 2010 02:29 Written by Socrates De Souza Monday, 11 October 2010 08:01
If you want to get ahead in life then a payday loan is a great option. Maybe you just need to get ahead for a week, which is why most people get one. The best part is it’s extremely simple if you bring along all the necessary information. Just take a pay stub into the office, show it to them, and it’s possible that you will qualify for a loan.
Keep in mind there are few conditions that you have to adhere to in order to get the loan. Providing two forms of ID is crucial to whether or not you receive a payday loan. This is just to ensure that you’re not impersonating someone in order to get the money you need.
References will be needed as well and each one of them will be called. Three is usually the number and the reason for this is to verify your identity. Plus if you don’t pay the loan back these individuals will be getting phone calls from the payday loan company. This is simple as long as you don’t write down anyone who has issues with you.
Oh, and make sure you don’t have any outstanding loans with other agencies. You have to remember that these places share their information and if one knows about you then there is a good chance that they all do. The end result is you won’t qualify for a loan. You also don’t want to get in the habit of paying off one loan with another loan.
The good news is when you get your payday loan your life will be quite easier. It doesn’t matter if you need to repair your vehicle, buy Christmas presents or pay off a doctor bill, because you can use the money for anything you need. Heck, some individuals get payday loans to take a much needed vacation that wouldn’t be possible otherwise.
There will also be some individuals who tell you to avoid payday loans because they do. While this is great for them they may not understand your personal situation. Plus, most people don’t want to have a loan hanging over their head from a friend or relative. The idea is to make it as easy as possible for yourself and have a smooth transition with the payday loan company.
The good news is that you will be able to find a payday loan institution just about anywhere in America. In every city you will find at least three different companies, all capable of providing you with that great payday loan. So pay them a visit, find out the requirements, and start enjoying your payday loan sooner rather than later.
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Clear Up Your Credit Record – Quick Internet Assistance To Allow You To Improve Your Credit Rating
Last Updated on Sunday, 10 October 2010 09:32 Written by Henry Zeng Sunday, 10 October 2010 09:32
Plenty of people login to the Website to find some credit score clean up ways to land in their own lap. When ever this would not happen, they turn out getting displeased and ascertain that the web is absolutely not the right place to search for these services. Well, unsure where to look on the World Wide Web can make it hard to attain the correct balance relief and credit improvement ways. Decreasing patience and cutting off the work even before you start it is bigger mistake.
Continue to keep the following aspects in mind when browsing for plain online assistance as far as the cures to clean up credit state are involved.
How rapid will you be provided suggestion of the cure that you are going to enjoy? If ever the web page holds you all over the earth just before even discussing of credit improvement, it is obvious that you are never going through basic and handy remedy.
Is it real? You will discover many counterfeit methods to have clean credit score. The conditions and terms will be sweetened to these level who even the most diligent consumer will find it difficult to be unshaken.
Still, always take into account that deceptive remedies are never ever going to work. In the long term, basically real solutions could possibly be positive solutions.
Genuine solutions are very quick to be aware of and basic to learn. What is involved from the investor is a lot of discipline, dedication and commitment to the ultimate target. It does not take a rocket person to find out how to clean up your credit profile.
When you get your credit report and analysis, review them carefully to make sure all the loans and credit accounts listed really belong to you. While all accounts listed as open should be current loans or balances. If a loan you’ve paid off or a credit card that was cancelled is still listed as open, contact the credit bureau and ask for your credit report to be corrected.
Still wondering how to clean up my credit & boost credit score fast? Visit our Credit Score Clean Up website and learn how to boost your score 135 points in 37 days. Also published at Clear Up Your Credit Record – Quick Internet Assistance To Allow You To Improve Your Credit Rating.