Reverse industry boom
By admin on June 28, 2007
Reverse Mortgages are becoming increasingly popular amongst the Baby Boomer generation. The market for reverse mortgages is also projected to increase throughout time as more and more Americans are living past the age of 62 and need help with their retirement. The number of reverse mortgage users is looking to exceed last year’s record year by the middle of the summer.
Check out this article on reverse mortgages with projections for the future.
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FHA wins
By admin on June 27, 2007
In a stunning upset, FHA backed loans produced fewer foreclosures than subprime loans. No one could have predicted this magnificent upset as subprime loans had more than twice as many foreclosures as their FHA loan counterpart.
These loans are very much the same as both recipients are first time homebuyers and possess less than stellar financial standing.
“We serve at-risk borrowers,” said Montgomery, a keynote speaker at a homeownership preservation forum at HUD’s Denver office. Montgomery oversees the $400 billion FHA insurance portfolio.
“The key is the FHA’s loss-mitigation program,” Montgomery said. “We want to keep people in their homes.”
In the 80’s, the HUD was the largest landlord in the Greater Denver area having close to 15,000 foreclosed homes in its possession. With 65 percent of the mortgages in Denver being FHA insured loans, while today that figure is around five percent.
There were only 247 foreclosed FHA insured homes in Colorado for May. Colorado ranks 10th in the nation for foreclosure rate in the United States.
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Little guy could lose out again
By admin on June 26, 2007
Lower to middle class down payment assistance could be a thing of the past. Not that the system had been around that long, 1997, to be exact. Since the first down payment assistance program started, with Nehemiah in 1997, these programs have been able to grow to over 40% of the Federal Housing Administration’s annual mortgage production.
“Right now, low to middle class families are utilizing down payment assistance programs that are under scrutiny by the Department of Housing and Urban Development. These programs allow people, who qualify by income guidelines, to accept a monetary gift from charitable organizations – such as the Nehemiah Corporation of America – and use it for their down payments. This practice has helped thousands remove themselves from their dead-end rental situations.”
Over the past 10 years these programs for down payment assistance have helped over 1 million people achieve the American dream of becoming a homeowner. These organizations have distributed $3.8 billion in down payment assistance. There is no government money involved in these programs but the HUD wishes to eliminate these programs which could bring the tax payer into the situation.
“HUD’s proposal, titled “Standards for Mortgagor’s Investment in Mortgaged Property,” targets home buyers who obtain loans insured by FHA, by removing the option to use charitable organizations’ assistance or private funding with ties to the seller for down payments and closing costs. HUD claims this type of assistance has been an issue for many years.”
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Popular amongst the retired crowd
By admin on June 21, 2007
An overwhelming number of seniors are taking advantage of reverse mortgages throughout the country. 300,000 seniors are taking advantage of the opportunity to make their home work for them. By taking advantage of the Home Equity Conversion Mortgage loan program these individuals have been able to secure cash for their home without even having to move.
“For some senior citizens on fixed incomes, reverse mortgages are a great way to cash in on their home equity to make needed repairs, pay unexpected medical bills or just to supplement their retirement. Seniors shouldn’t have to choose between taking out a loan to fix up their home and putting food on the table. With a reverse mortgage, this difficult decision is a thing of the past,” U.S. Housing and Urban Development Secretary Alphonso Jackson said.
Over 76,000 seniors used a reverse mortgage in 2006 which was almost 70,000 more than that issued in 2000. In 2007, the FHA has already insured 69,833 which puts them on pace to break the mark set in 2006.
As the lone high mark in the housing market, the reverse mortgage will likely become more and more of an option, as the baby boomers reach the required age of 62. With over 34 million Americans over the age of 65 and a projection of 70 million by the year 2030 the use of reverse mortgages only looks to peak each year.
“As retiring baby boomers become eligible, reverse mortgages will continue to gain in popularity. Seniors are looking for financial independence and security late in life, and reverse mortgages continue to be their best bet,” Jackson added.
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Homeownership month continues
By admin on June 19, 2007
“Promotion and Protecting Homeownership” is this year’s theme for National Homeownership month which is taking place this month. The theme is focusing on first-time home buying as well as informing current homeowners and potential homeowners about the responsibility that comes with being a homeowner. This month’s theme will also encourage individuals to read the “fine print” of their mortgage papers.
The Department of Housing and Urban Development has been around since 1934 and has been available to help individuals who may otherwise not be granted a competitive mortgage and a chance for ownership. The Department has helped over 34 million families since its inception. As of late, the FHA loan has fallen out of favor with the American populous for that of the subprime market. With the current rate of foreclosures and defaulting, the shift towards modernizing the current the FHA system is in high demand.
The goal of the Homeownership month is to shift funding in the department towards educating Americans in the ways to obtain the American Dream of homeownership. Over 70 percent of Americans are homeowners with a growing number of minority families. With the legislation passing through the chambers of Congress the modernization seems to be coming to fruition. With the passage of the FHA Modernization Act, the amount of homeowners who will actually be able to afford their payments will most likely increase.
The American Dream may seem just like that, the American Dream. Education is key to a successful homeowner and this month of Homeownership is sure to educate everyone in the ways of responsible homeownership.
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Free FHA Lending Guide
By admin on June 18, 2007
I know that they released this information a few weeks ago but I thought I would revisit it. The Mortgage Loan Place released a free Lending Guide for those seeking information about FHA Loans.
The guide is completely comprehensive and has had a lot of great feedback from the industry and consumers alike. If you get a chance to you should definitely take the time to download and look over all the great information that they worked so hard in presenting.
The site is quite clean in presentation and has the best information on the web regarding FHA Loan programs that is just short of the HUD site. But who can blame them for not having as much information as the government’s page.
If you are looking for great information to present to your consumers or readers then definitely check out the Mortgage Loan Place and their comprehensive site about FHA Lending.
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How much does America know about FHA reform?
By admin on June 15, 2007
Majority of the American Public favors FHA modernization. Here are some key statistics about a study conducted on how aware the American public is about the many key changes that are sought in regards to the FHA Loan program.
When it comes to being completely clueless on the act itself more Americans favor the changes as those that oppose it, 26% to 9% while those that remain undecided rests at 13%. The percent of those that actually know what the Expanding American Homeownership Act of 2007 is at 48%.
When given a description of the Act itself those that support it went up to 80%. What were they told about the Act, “the rules to make it easier for the FHA to make mortgage loans available to first time homeowners and people with moderate incomes.” With 55% of those asked about it favored the change strongly.
“Only 35% of African Americans are unaware of the Expanding American Homeownership Act of 2007, compared to majorities of whites (55%) and Hispanics (51%). Without any explanation, four-in-ten African Americans (43%) favor the legislation — a much larger proportion compared to whites (23%) and Hispanics (30%). These elevated levels of support are maintained after respondents heard a brief description; 88% of African Americans favor the Expanding American Homeownership compared again to 78% of whites and 81% of Hispanics.”
The survey was conducted by The Mellman Group of Washington, DC and the numbers were brought to you from their press release.
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Ohio doing their part in rising foreclosure rates
By admin on June 14, 2007
Mortgage delinquency is at an all time high thanks to states in the Midwest. The first quarter numbers reveal that Midwestern states such as Indiana, Ohio, and Michigan are pushing the rate of delinquency up in the nation. As could be predicted the subprime delinquency was up while FHA and VA delinquency fell.
With close to 44 million first time mortgages out, there are 6 million subprime loans. The Prime loan delinquency rate remained stagnant over the first quarter. Subprime delinquency jumped up to 13.77 percent which was a move of 44 bps. In FHA loans, the delinquency rate fell 131 bps to a percentage of 12.15, while the VA delinquency rate was 6.49 percent a fall of 33 bps.
Delinquency rates weren’t the only rates rising in the first quarter as foreclosure percentages moved upward as well. The rate of loans entering into foreclosure moved to a record .58 percent of all loans.
“The percentage of loans in foreclosure would be well below the average of the last ten years were it not for Ohio, Michigan and Indiana,” MBA Chief Economist Doug Duncan said in a statement. “And the rate of foreclosures started nationwide would have fallen were it not for the big jumps in California, Florida, Nevada and Arizona.”
Statistically speaking, Indiana, Michigan, and Ohio account for 20 percent of all foreclosures making up on nine percent of all loans. Duncan stated that he believed the reason for the increase in Michigan, Ohio, and Indiana was due in part to the decline in manufacturing jobs in these states and subsequent layoffs.
On a side note there was word that 24 of the states declined in foreclosures started. But with the help of Nevada, Florida, and California the rate of loans entering foreclosure actually rose as a whole.
“The level of foreclosures and foreclosure starts for those three states exceed what occurred in Texas during the oil bust of the mid-1980s, and Ohio is the highest ever seen in the MBA survey for a large state,” he added.
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The Last Resort
By admin on June 12, 2007
I found a really great site today on shopping for a reverse mortgage. It includes some really great tips if you are in the market for obtaining a reverse mortgage. Like any other financial undertaking a reverse mortgage should be thought out carefully before going full steam ahead.
The idea of receiving money for the home you currently live is can be appealing but if money is all you are after then maybe you should consider selling as John Rother, the policy director for AARP in Washington advises.
“If your only objective is getting money, you’re better off selling,” Rother said. “This is not something you want to do casually – this is really more of a last resort.”
Another thing to consider is what if you are still alive and the payments you receive over a fixed period of time run out and you are left with the upkeep, the taxes, and the insurance on the house.
Think of a reverse mortgage as a last resort to obtain income in your retirement years.
“There is a price to be paid – and that is the interest cost of the funds borrowed, and that accumulates over time,” says Bob Jazwinski, a CPA and financial planner based in Hermitage, PA.
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Raising the Loan limit, who could imagine?
By admin on June 11, 2007
The FHA is seeking to raise its current loan limits to be competitive with other mortgage purchasers including Fannie Mae and Freddie Mac. In high cost areas the FHA is looking to raise the limit to 100% of the loan limits offered by the other two and in low cost areas to increase the percentage by 19% up to 67%.
“If it were increased, it would provide more options,” says Delbert F. Reynolds, Wisconsin field office director for the FHA. “Loan limits aren’t the only issue. One of the points of modernizing is to do some catch up with other tools, like not requiring a down payment.”
This is just one of the helpful changes the HUD is looking to change in the modernization of the FHA which also includes eliminating down payment requirements which previously required 3% down payment.
The changes could bring the FHA Loan back into the spotlight and up to date with the stiff competition in the loan industry.
“There are other agencies that have loan programs, that offer loan down payments, and that are targeting the portion of the subprime market with prime or close to prime. As a person who follows housing policy and finance, I don’t think of the FHA hardly ever,” Smith says.
Keep up to date with all your FHA news here at FHAday.com.
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