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FHA in the Mortgage News

FHA has dominated the mortgage news in 2008 because they are one of the few lending products that have not seen significant tightening of guidelines for purchase or refinancing. Because of the recent housing market problems, President Bush has breathed new life into Federal Housing Administration (FHA), which allows it to get back to its mission of helping underserved, low- to moderate-income, credit-worthy (not necessarily good credit) homeowners and home buyers. As a result, the FHA has been headlining mortgage news nationwide.

FHA Secure has now helped in excess of 130,000 homeowners avoid foreclosure, as reported by mortgagedaily.com. The Mortgage Press and HUD report that FHA has helped 300,000 families find relief with government-based loans. The New York Times reports that mortgage applications are up slightly this week. CNN Money reports that applications are up by 2.8% and that pending home sales tick up.

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FHA Mortgage Rates dropped below conforming rates in 2008, but with the economy and inflation concerns, interest rates will likely increase soon. Refinance today and get a fixed rate guarantee for thirty years.

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The FHA is part of the Department of Housing and Urban Development (HUD) It’s been around since 1934, but has been seeing declining action due to the housing prices shooting higher than the FHA loan limits. But this has recently changed with the passage of new legislation to help struggling homeowners avoid foreclosure and modernize FHA’s guidelines to help first time buyers and current homeowners looking to refinance their subprime adjustable rate mortgages (ARMs).

Earlier this year, President Bush signed into law FHA Secure. This law allows holders of ARMs facing foreclosure due to skyrocketing interest rates to refinance into fixed-rate loans. On July 30, 2008, in response to the continuing housing trouble, the Bush administration pressed new laws like the Housing and Economic Recovery Act of 2008. Under this act is the FHA Modernization Act of 2008. Its purpose is to modernize the current FHA guidelines. The modernization offers several key provisions, including:

  • Section 113, which raises the FHA minimum borrower contribution to 3.5% and officially prohibits the use of seller-funded down payment assistance programs.
  • A permanent increase to the FHA loan limit of 115% of the average median home value, with a cap of $625,000. This will help make it more feasible for people to use FHA to finance their home purchase loan.
  • Section 115, which makes permanent the ability of HUD to insure rehabilitation loans, which means the 203K is here to stay.
  • Sec. 122, which will open the Home Equity Conversion Mortgage (HECM), also known as the reverse mortgage, to be used to purchase a new home. This it will allow many seniors who cannot sell their current home the chance to purchase a new home using the equity of their current home to cover the payments. Reverse mortgage origination fees are now limited to 1.5% versus the current 2%.
  • Sec. 124, which will offer a five-year pilot program to offer mortgages to borrowers that do not have traditional credit as an automated process.
With the passage of FHA Secure and the new FHA Modernization Act of 2008 under the Housing and Economic Recovery Act of 2008, FHA has become a popular loan for refinancing. With the higher loan limits and still competitive rates, the FHA home loan is also fast becoming a popular choice for purchase loans and reverse mortgages. In addition to all the new benefits offered by the FHA Modernization Act of 2008, first time buyers can benefit from a tax credit that’s worth up to $7,500. It’s a no-interest loan that is paid back over the course of 15 years, which could really help with the expenses involved with getting a new home. Or, it could be used to make some improvements. Are you a homeowner holding an adjustable rate loan that’s due to reset? Fill out the free loan quote on this page. You could qualify for a new fixed-rate FHA loan that will save you money! First time homebuyers, with FHA’s increased loan limits and a tax credit that’s worth up to $7,500, now is the time to buy. Remember, you only have until July 1, 2009 to take advantage of the tax credit.

 

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All FHA mortgage products are provided by FHA Home Loan Services, which may arrange loans with third party providers. FHA Home Loan Services is national mortgage lender. Not everyone will qualify for a government insured mortgage. FHA Home Loan Services cannot guarantee all loans will be made or whether all loan applications will be approved by the investing bank.
This is not a commitment for a FHA house loan or an advertisement for credit as defined by paragraph 226.24 of regulation Z.
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