Posts Tagged ‘fannie mae’
Monday, March 8th, 2010
A great article published in the New York Times taps into the American psyche when it comes to homeownership. The author, Robert J. Shiller (one half of the super Swedish rock group Case/Shiller), provides a brief history behind the creation of The Federal Housing Administration (FHA) and Fannie Mae in the 1930’s. Mr. Shiller notes these institutions were created to prop up the housing market and thus stimulate employment. (One-third of the unemployed during The Great Depression were identified with the building trade.)
Mr. Shiller questions the financial soundness of having the taxpayer continue to finance (or at least insure) the American Dream. He feels the driving force behind this call to action is Americans’ belief that homeownership means the preservation of certain liberties. While few can argue with this observation, the article leaves out another important side of the story.
Prior to the advent of FHA, Americans were losing a home to foreclosure at a rate of 1,000 a day. At the time, it was not uncommon for homeowners to have multiple mortgages (each with short terms and high rates). Sound familiar? FHA mortgages were created to cure this ailment by allowing at-risk homeowners to refinance these high cost loans with low, fixed rate mortgages. The program was later expanded to help homebuyers finance their purchases. What FHA brought to the table for the first time was an amortized mortgage. Overtime, this instrument helped Americans build equity in their homes as well as build their personal wealth.
While Mr. Shiller is right to question the risk of supporting these institutions, it’s also important to look at the wealth building opportunities these lending programs have provided to disadvantaged populations. Rather than reinventing the wheel to get us out of The Great Housing Depression, we’d be wise to revisit history and learn what we can from the FHA.
DHW asks: What do you think?
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Tags: american, case, case-shiller, fannie mae, FHA, great depression, Homeownership, Housing, robert shiller
Posted in FHA, Housing, case-shiller, fannie mae, homeowners, robert shiller, shiller | 1 Comment »
Tuesday, January 12th, 2010
Although the numbers are improving, a third of loans modified by Fannie Mae and Freddie Mac early last year were delinquent after six months.
These loans were modified prior to implementation of Obama’s Home Affordable Modification Program.
DHW asks: Do you think loan modifications are making a difference?
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Tags: fannie mae, freddie mac, HAMP, home affordable modification program, loan modifications
Posted in HAMP, Uncategorized, fannie mae, freddie mac, home affordable modification program, loan modification | 1 Comment »
Wednesday, November 25th, 2009
Besides saving yourself money, using an FHA endorsed loan to purchase a home may be the most patriotic thing you can do. Hear me out. In the late 1990s, the government correctly sought to increase homeownership. Naively, the government did not look to the FHA to take charge in this call to action. Instead, they relied on Fannie Mae and Freddie Mac to broaden the types of loans they purchased from mortgage lenders, relaxing underwriting guidelines and pushing the moral envelope. Fannie Mae and Freddie Mac had a fiduciary responsibility to look after the well being of their shareholders, not the consumer. As such, the loans created over the next few years put an emphasis on profit — excessive prepayment penalties, interest only and “teaser” rates. The appeal to consumers: These new loans came with little or no money down.
In FY 2009, FHA insured 30% of total purchases and 20% of total refinances in the housing market (it does not lend its own money). Here are just some of the benefits of using the FHA.
- Low down payment of 3.5 percent. The down payment can even be a gift from a relative, non-profit organization or employer.
- Interest rates are competitive with conventional mortgages
- Guidelines allow buyers to qualify for more home than conventional loans
- There is no income cap for FHA
- Fixed interest rate with no prepayment penalty
Uncle Sam NEEDS YOU!
When you use the FHA to purchase a home, you pay an upfront mortgage insurance premium (MIP). This upfront premium is commonly rolled back into the mortgage to avoid an out-of-pocket expense. In addition, you pay a monthly MIP. The monthly MIP is less expensive than private mortgage insurance (PMI) for a conventional loan with 5 percent down (if you can still find a lender originating 95% LTV conventional loans). These MIP fees generate $1 billions in revenue for the government every year.
The FHA loan can also be used to finance home improvements for purchases and refinances under its 203K program.
Find FHA approved lenders in your area
Find FHA loan limits in your area
DHW asks: Have you used the FHA to purchase or refinance a home? How was your experience?
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Tags: 203k, fannie mae, FHA, fha lenders, fha loans limits, freddie mac, home, purchase, refinace
Posted in 203k, 203k lenders, FHA, fha lenders, fha loan limits | 1 Comment »
Monday, November 16th, 2009
During a speech to the National Association of Realtors in San Diego, FHA Commissioner David Stevens said his agency is not headed for the same fate as Fannie Mae, Freddie Mac or the subprime sector. Concerns about the FHA’s financial well being were raised last week when it was revealed in an independent audit that the agency’s funds were below legal guidelines.
The Commissioner sought to minimize these concerns, reporting the agency had $31 billion in capital – an increase of $3.5 billion from a year ago.
Stevens went on to say that the FHA is “the only participant in home financing services in the U.S. economy that hasn’t needed a bailout, hasn’t needed (funds from the government’s Troubled Asset Relief Program), hasn’t needed special assistance and is still completely self-sustaining.”
The AP reports the FHA has insured almost 25 percent of all new loans made in 2009. Eighty-percent of these loans represent first time home buyers.
Stevens rejected comparisons between the FHA and the subprime market. “Nothing could be further from the truth,” he said, stressing the FHA has far more stringent underwriting guidelines for the loans it insures.
As the unemployment rate has risen, so have FHA’s losses. According to the Mortgage Bankers Association, approximately 17 percent of FHA borrowers are at least one payment behind or in foreclosure. This compares with 13 percent for all loans.
The FHA does not make loans. It insures against default, taking much of the risk away from lenders. FHA loans have grown in popularity in recent years as credit markets have tightened up. The agency’s 203K rehab loan is also growing in popularity as more first-time home buyers purchase foreclosures.
DHW asks: Do you think the FHA is at risk of needing a government bailout?
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Tags: 203, 203 k streamline loan, 203 k streamlined, 203 k streamlined loan, 203k, 203k lenders, 203k mortgage, 203k rehab loan, 203k streamline, 203k streamlined, buyers, commissioner, congress, david stevens, employment, fannie mae, FHA, fha 203 k, fha 203 k streamlined mortgages, fha 203k, fha 203k mortgage, fha 203k mortgage loans, fha 203k rehab, fha 203k streamlined mortgage, first time buyers, first time homebuyers, foreclosure, freddie mac, guidelines, home buyers, homebuyers, Housing, housing news, loan, mortgage, national association of realtors, Real Estate, real estate news, realtors, stevens, subprime
Posted in 203k, 203k lenders, 203k mortgage, 203k rehab loan, 203k streamlined, FHA, Housing Article, david stevens, fha 203 k, fha 203k, fha 203k lenders, fha 203k loan, fha 203k mortgage, fha 203k mortgage loans, first time home buyer, first time home buyers, first time homebuyers, foreclosure, freddie mac, homebuyers, realtor, realtors, rehab loan, subprime | 1 Comment »
Thursday, November 12th, 2009
Tags: $6500, $8000, $8000 tax credit, 6500 tax credit, 6500 tax credit extension, 8000 tax credit extension, Builders, buyers, congress, employment, extension, fannie mae, FHA, fha 203 k, fha 203 k streamlined mortgages, fha 203k, fha 203k rehab, fha 203k streamlined mortgage, fha approval, fha approved condo, fha approved condos, fha cash reserves, fha limits for my area, fha limits in my area, fha loan limits, fha reserves, fha's reserve funds, first time buyers, first time homebuyers, foreclosure, freddie mac, guidelines, home buyers, home sales, home seller, home values, homebuyers, Housing, housing credit extension, housing news, housing prices, housing report, lender, loan, mortgage, Obama, President, president barack obama, President Obama, Real Estate, real estate news, reserve funds, Sales, seller, worker home ownership and business assistance act of 2009, worker homeownership and business assistance act of 2009
Posted in FHA, Housing Article, foreclosure, rehab loan | 1 Comment »
Thursday, November 12th, 2009
U.S. foreclosures sank for a third consecutive month in October, down 3% from the previous month. However, many feel this trend will not continue. Foreclosure notices were curtailed in many states due to temporary, legislative intervention. CNBC reported Nevada foreclosures “dropped 26 percent from the previous month because of new legislation requiring mediation before initiating foreclosure proceedings.” Illinois had similar legislation, but foreclosure notices skyrocketed there 56% in October from the previous month.
States leading in foreclosure:
- Nevada
- California
- Florida
- Arizona
- Idaho
DHW asks: Are foreclosures down in your area?
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Tags: $6500, $8000, $8000 tax credit, 6500 tax credit, 6500 tax credit extension, 8000 tax credit extension, arizona, Builders, buyers, california, employment, extension, fannie mae, first time buyers, first time homebuyers, florida, foreclosure, foreclosure news, foreclosures, freddie mac, guidelines, home buyers, home sales, home seller, home values, homebuyers, Housing, housing credit extension, housing news, housing prices, housing report, idaho, lender, loan, mortgage, nevada, Real Estate, real estate news, Sales, seller, short sale, state foreclosure, state foreclosures, tax credit, tax credit extension, unemployment, worker home ownership and business assistance act of 2009, worker homeownership and business assistance act of 2009
Posted in Housing Article, foreclosure | No Comments »
Wednesday, November 11th, 2009
In a CNBC interview this morning, Realogy CEO, Richard Smith, called on FHA to increase its minimum required down payment of 3.5%. Mr Smith suggested the ‘risk profile’ will have to change to stave off foreclosures. This argument only perpetuates the myth that those who put less money down are somehow less attached to their home than those who put down a significant amount. Mr Smith should have taken the opportunity to call on the administration and Congress to cure the real problems that cause mortgage delinquencies.
The Urban Institute, a Washington D.C. based think tank, issued a study recently that revealed some interesting, though not surprising, data. Those who put little or no money down tend to be more poor than those who put, say, 20% down. They are also less likely to have health insurance. Someone who has health insurance is more likely to miss less work due to an illness than someone who has no insurance. This is only one example cited in the Institute’s report.
Although many pundits, including Mr Smith, suggest the nation’s recovery is tied to housing, it is not. It is tied to job creation. You cannot have a 10% unemployment rate and expect to have a stabilizing housing market.
Reology is the world’s largest brokerage operator. They own Coldwell Banker, Century 21, Better Homes and Gardens Real Estate and ERA.
DHW asks: Do you think the FHA should increase its minimum required down payment?
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Tags: $6500, $8000, $8000 tax credit, 10 percent, 203 k streamline loan, 203 k streamlined, 203 k streamlined loan, 203k, 203k rehab loan, 203k streamline, 203k streamlined, 3 down payment, 3.5 down payment, 3.5 percent, 3.5%, 6500 tax credit, 6500 tax credit extension, 8000 tax credit extension, barack obama, Builders, buyers, congress, down payment, employment, extension, fannie mae, federal housing administration, FHA, fha 203 k, fha 203 k streamlined mortgages, fha 203k, fha 203k rehab, fha 203k streamlined mortgage, first time buyers, first time homebuyers, foreclosure, freddie mac, guidelines, home buyers, home sales, home seller, home values, homebuyers, Housing, housing credit extension, housing news, housing prices, housing report, lender, loan, mortgage, national association of realtors, Obama, president barack obama, President Obama, realogy, tax credit extension, unemployment, worker home ownership and business assistance act of 2009, worker homeownership and business assistance act of 2009
Posted in 203k, Editorial, FHA, Housing Article, foreclosure, health insurance, realogy | 1 Comment »
Wednesday, November 11th, 2009
The Miami Herald reported the Federal Housing Administration (FHA) is temporarily relaxing underwriting guidelines for some condominium communities. The changes are intended to increase condo sales and put occupants in otherwise vacant units.
DHW asks: Do you agree with the FHA’s decision to relax condo underwriting guidelines?
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Posted in FHA, Housing Article, condo, condo sales, condominium | 1 Comment »
Monday, November 9th, 2009
Last week, CitiMortgage suggested in a USA Today article that 1 in 5 homeowners currently in default of their mortgage are doing so strategically or voluntarily. They cite Sharon Sakson as one of these ’strategic defaults.’ Ms Sakson was laid off as a television writer and producer. After losing her job, she ‘burned through her savings to pay her mortgage.’ Burned through her savings. Ms Sakson is possibly the worst strategist I know. She strategically lost her job then voluntarily burned through her savings to make her mortgage payments. She eventually ‘walked away’ from her New Jersey home.
Clearly, we’re made to think Sakson and others who ‘walk away’ from their homes are bad people. How CitiMortgage and other lenders can get away with this type of character assassination is beyond belief. Even more unbelievable, USA Today refuses to call lenders out on this practice.
Readers should also note the USA Today article is not entirely accurate with regard to the seven-year wait period. If the foreclosed property is a primary residence, a borrower may be eligible for a new mortgage in five years.
DHW asks: USA Today’s decision to ‘blame the victim’ struck a nerve with a lot of folks at DesperateHouseWise. Have you had to walk away from your home?
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Posted in Editorial, Housing Article, citi, citimortgage, home prices, home value, strategic default, strategic defaults | 1 Comment »
Saturday, November 7th, 2009
Citing a loss too great for taxpayers, the US Treasury Department blocked Fannie Mae’s nearly $3 billion sale of unused low-income housing tax credits to Goldman Sachs Group and Berksire Hathaway.
DHW asks: Do you agree with the Treasury’s decision?
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Posted in Housing Article, berkshire hathaway, fannie mae, goldman sachs, housing tax credits, treasury | No Comments »