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Thread summary:

Mortgage: bail out, buy a home, loan, insurance, personal debt consolidation.

Old 08-31-2007, 05:27 PM
Location: Lehigh Valley
1,030 posts, read 3,798,552 times
Reputation: 426


My Way News - Bush Unveils Mortgage Proposals

My initial reaction is that this is a good thing, anyone with more experience in the industry care to comment?
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Old 08-31-2007, 09:36 PM
Location: Beautiful East TN!!
7,281 posts, read 18,705,867 times
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Originally Posted by KristyLiz View Post
My Way News - Bush Unveils Mortgage Proposals

My initial reaction is that this is a good thing, anyone with more experience in the industry care to comment?
Thanks for bringing this up. I found two excerpts from this article very telling and makes a big difference:

"It's not the government's job to bail out speculators or those who made the decision to buy a home they knew they could never afford," Bush said in the Rose Garden. "Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders or a little help from their government."

I agree with this, it is NOT the governments job to bail out those folks that found ways to qualify for homes way out of there economic price range just so they can "keep up with the Joneses", but then again, half of that blame also lies with the lenders that approved these loans, they should be right in there rowing with the homeowner and accept responsibility for their actions as well.

The other is:
"Bush also urged Congress to modernize and improve the FHA so more homeowners could qualify for the mortgage insurance the agency provides, saying, "I look forward to signing a bill as quickly as possible." Last year the House passed legislation to modernize FHA, but Congress has not yet sent a bill to the White House."

Folks need to realize who really runs this country and who is the mouth piece for it. Every one blames who ever is sitting in the oval office when stuff hits the fan but where does it really lay? In the congress where everyone is to worried about voting their party verse the issues and getting so stuck in their own pockets and personal debts to lobbyists that the real people issues get buried so deep for so long nothing gets done.Or if it does, it is to late for a lot of folks. But who gets blamed for that? The mouth piece. Doesn't make much sense does it?

So yea, I am glad Bush said this, I think he is a great person who doesn't put up with crap and I appreciate that attitude verses a wishy washy, but for now it is just words. If Congress doesn't do their jobs, it really has no meaning unfortunately.

Now, will allowing more people to be qualified for FHA insured loans really help those who bought 100% when the property was over inflated values and now facing foreclosure? No I don't think so because:
1. NO one is going to loan more on a property than it is currently worth, even government backed loans.
2. Refinancing into a PMI loan from a non PMI loan and/or interest only mortgages means a higher payment, especially if the credit score of a borrower has gone down from missed mortgage payments, they are going to find themselves STILL owing a lot more a month for the new mortgage payments than the prior to the adjustment on their ARM loan and they still will not be able to afford that.

Unfortunately, as a mortgage broker myself, I don't think adding more government insured mortgages into the market is a solution as so few people inthis current bad situation will actually benefit from it.

I personally think the banks who approved the loans should forgive the over appraised value difference using the insurance policies they are supposed to have in place and lower the rates for a x period of time for the homeowner to either sell, improve the property, get a second job or what ever to fulfill their end of the deal. No I don't think these lenders should be allowed to jump ship with the profit they have today and run. Accountability should be at the forefront of this, both with the homeowner and the lender. And if it is found that there are loan officers out there who cut corners or did anything shady to get these folks these loans, that are now looking at foreclosure due to ARM reset, just so they could make a buck from it should be accountable also, yes, you did just hear that from a mortgage broker/loan officer.
Also the appraisers who over inflated house values should be held accountable.
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Old 08-31-2007, 11:22 PM
Location: California
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There's some good stuff being voted on in September regarding FHA. Hopefully increasing the loan limit is one of them...

One interesting thing people may not know about FHA is it actually can bail people out when they are upside down in a home, assuming they have a 1st and 2nd mortgage, and the 2nd mortgage is/was big enough to take up some equity.

Basically, FHA will allow you to refinance the first for cash out, or rate and term and as long as the 2nd will subordinate it will completely ignore the 2nd only regarding equity requirements, or CLTV (Combined loan to value).

So, lets say for example someone bought a $100,000 home and did an $80K first, and a $20K second. Now the house has dropped to a value of about $85K and the first mortgage has gone adjustable, and they won't be able to afford the payment. Let's just assume it's a totally free loan for this example, so no costs. They do a rate and term loan for $80K based on a value of $85K so the LTV (loan to value) is 94% and the actual CLTV is 118%. So, if the 2nd mortgage subordinates behind an FHA 30 year fixed you could do this loan...assuming they qualify. The payment on the current 2nd is still factored, just not the equity it takes.

The people who did the stated loans and barely could qualify before are still likely toast due to higher rates, but this loan could save a select set of borrowers.

Anyways, my main point was that FHA has already had some huge changes that are very beneficial, and look to have more. Some really cool stuff that won't cause sellers to cringe when they hear it's an FHA loan. They won't get stuck paying the buyers fees anymore...
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Old 09-01-2007, 12:08 AM
Location: Charlotte, North Carolina
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they have no choice but to fix the situation.....otherwise MARKET CRASH!

the problem will be when everyone forecloses on FHA mortgages
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