FHA to the rescue
By admin | April 19, 2007
Many subprime loan holders are currently holding their breath as Congress debates proposed reform to the FHA program. Many of those subprime loan holders are in the midst of a foreclosure on their home and with the reform may have a way out to keep their home and not be foreclosed upon.
Brian Montgomery, chief of the Federal Housing Administration says that currently there are 60,000 subprime borrowers that will be helped but if the proposed reform that there could easily be 200,000 more. The program was set up to insure low-income family home buyers.
Through the past 12 years the share of individuals with a FHA Loan has decreased by a 7.3 percent share of the total market. Many of these individuals found it much easier and faster to get a subprime loan over a FHA Loan.
“Quickly reforming (FHA) will open up opportunities for people who have been thrown into the subprime market and find themselves in great difficulty now,” said Rep. Maxine Waters, the California Democrat who heads the housing panel on the House Financial Services Committee.
With the FHA reform borrowers will receive more affordable payments on these low-cost homes. This will help offset the spike in interest rates which occur in the later life of a subprime loan.
The FHA reform is going into place to help offset the foreclosure spike in the current market. The reform is also going to help restore those with good credit before their foreclosure back to their good credit. Over all for subprime borrowers things are looking up.
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