David Stevens

Federal officials announced a new mortgage plan today targeted at senior citizen homeowners. The new reverse mortgage option is designed for homeowners taking out smaller loans than those offered in the standard federally insured reverse mortgage program. The new reverse mortgage option, known as the Home Equity Conversion Mortgage Saver, was created for homeowners who want to avoid the high cost of starting a standard reverse mortgage, according to David Stevens, commissioner of the FHA. “We have noted concerns that some senior citizens find that our fees are too high for them,” Stevens said. “In response, we created [the new program], which will provide seniors with a reverse mortgage option that significantly lowers costs.” TRD

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Federal Housing Administration officials are contending that congressional moves to increase the minimum required for down payments on FHA-backed loans could set the residential market into another slump, according to the Wall Street Journal. Although critics claim that the FHA program allows risky buyers to make purchases beyond their means, David Stevens, commissioner of the FHA, is warning that increasing the minimum down payment requirement to 5 percent from 3.5 percent could be detrimental to the housing market. “We share the goal of increasing equity in home purchase transactions,” Stevens said, adding that he believes the proposed percentage hike would “adversely impact the housing market recovery.”

Williamsburg’s 229 North 8th Street, which went on the market as a
condominium a year ago, has started listing units as rentals, according
to Brownstoner. One-bedrooms are on the market for $2,500 and
two-bedrooms for $3,500. Some units are still up for sale, ranging in
price from $465,000 to $699,000. The building received FHA approval,
meaning units are available for purchase with a 3.5 percent down
payment, in mid-July. [more]

From the August issue: Frances Katzen, an executive vice president at Prudential Douglas
Elliman, was elated when she found a buyer for the one-bedroom she was
representing in a Lower East Side condo conversion.
The transaction went awry, however, when the buyer learned at the
closing table that the financing she had been counting on had fallen
through, thanks to an obscure loophole in guidelines by the Federal
Housing Administration: Loans insured by the FHA currently cannot be
issued in a condo conversion until at least one year after the condo
has been declared effective.
The buyer “got all the way to the closing and was told that the
mortgage was not issued,” recalled Katzen, who now refuses to work with
FHA-insured loans, despite the fact that the government-backed
mortgages are exploding in popularity. [more]