The Federal Housing Administration and President Barack Obama’s plan to jump-start the housing market has led to historically low interest rates of 3.75 percent on 30-year mortgages, but critics of the policy warn that the FHA’s easy lending may lead to a second housing-bubble, the Fiscal Times reported. [more]
HUD Secretary Shaun Donovan
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, is pushing for mortgage refinancing reform and supporting a proposed bill to eliminate certain refinancing barriers, according to DS News. The Federal Housing Administration convened with the Senate Banking Committee yesterday where Donovan made his case that lower fees, simpler underwriting guidelines and manual appraisals for borrowers would increase refinance opportunities for homeowners. [more]
A little-noticed mortgage rule change that took effect April 1 could create hassles for significant numbers of homebuyers who plan to use low down-payment Federal Housing Administration financing this spring.
The change affects anyone with one or more “collection” accounts buried away in national credit bureau files. These include medical, student loan, retail and other debts reported as unpaid — correctly or incorrectly — by creditors and subsequently sent to collection agencies. [more]
If you’re considering buying a house with an Federal Housing Administration mortgage and expect the seller to help out with your closing costs, here’s a heads-up: FHA plans to impose significant restrictions on the amount of money sellers can contribute at settlements in the near future. On top of that, FHA also will be raising its mortgage insurance premiums during the coming weeks, increasing charges for new purchasers across the board.
You might ask: Why hit us with additional financial burdens right now, just as housing is showing modest signs of recovery in many areas, and the spring buying season is getting under way? [more]
From left: HUD Secretary Shaun Donovan and President Barack Obama
The Federal Housing Administration continues to experience “considerable risks” to its finances, and the Obama administration will continue to minimize the FHA’s exposure in the mortgage market, Reuters reported.
To create a more “robust private system of housing finance and protect the FHA fund for the future” the government must scale back the FHA’s mortgage presence, Housing and Urban Development Secretary Shaun Donovan told Congress today, according to Reuters. [more]
Could gloomy popular assumptions about how tough it is to get approved for a
mortgage be scaring away large numbers of people who are qualified from even
applying?
Could the same worries — I can’t come up with the big down payment I
need, my credit scores are too low, my bank account has almost none of
the “reserves” lenders want to see — put a needless damper on a housing
recovery in the new year?
You bet. Lenders and economists will tell you flat out: The lack of accurate
information about the availability of loan programs that are designed to
address special needs is discouraging far too many consumers from even
considering an application, much less shopping around. [more]
Amid concerns about the Federal Housing Administration’s financial health, Obama’s has just approved an appointee to head the agency, the Wall Street Journal reported. But his pick, Carol Galante, has not gone over well with Republicans, the Journal noted.
“I think we need people now in the administration with a sense of urgency about the need to turn things around, reduce our debt, and to avoid further bailouts,” said Republican Senator Jim DeMint of S.C. “She does not appear to have that sense of urgency.” The Wall Street Journal reported last week that lawmakers are concerned the agency will need a bailout, a belief confirmed by both an independent audit and a University of Pennsylvania study. [more]
As if there were not enough bad news for condominium owners already, there is the fact that tomorrow marks a mass expiration of Federal Housing Authority and Fannie Mae project certifications for condo projects across the U.S.
To combat the possible exodus of eligible condo buildings, National Condo Advisors, a Westchester-based firm that streamlines the FHA-approval process for developers and owners, is holding a 24-hour application marathon to push through the torrent of re-certifications.
Without certification from the FHA or Fannie Mae, many condo buildings may find it much more difficult to sell their units, but many aren’t even aware that the certification is expiring, said Orest Tomaselli, CEO at National Condo. [more]
HUD Secretary Shaun DonovanControversy continues to swirl around the Federal Housing Administration, as lawmakers are accusing the agency of exacerbating its problems by downplaying the extent of its financial struggles.
The Wall Street Journal reported that lawmakers are concerned the agency will need a bailout, a belief that both University of Pennsylvania research and an independent audit confirmed in recent weeks, and want Department of Housing and Urban Development Secretary Shaun Donovan to come clean.
The independent audit found that projected losses on the $1.1 trillion in mortgages the FHA backs would leave just $2.6 billion in reserves, or 0.24 percent of the value of the agency’s insured mortgages, to cover losses over the next three decades. [more]
Federal Housing Administration officials denied reports showing the agency would face mounting losses and eventually require a taxpayer bailout, the Wall Street Journal reported, and said it continues to generate more revenue than expenses.
The FHA said it would have $2.6 billion in reserves even after taking into account expected losses on the $1.1 trillion of mortgages it guarantees, assuming housing prices fall 5.6 percent next year and then begin to rise. Once those prices rise, the FHA believes it will be able to replenish its reserve funds very quickly. Comments
