FHA to the rescue, but will it COST you more?

Darrell Evans — Sun, 01 Jun 2008 20:32:27 -0700

The FHA Program which has long been a one size fits all program where someone with no established fico score or credit history as well as someone with a seasoned credit history and perhaps a score of 720 were eligible for the same interest rate pricing. In addtion, the up front mortgage insurance premium and montly premiums were also the same...well not for long.

FHA has issued changes to its mortgage insurance structure in an effort to assist more homeowners who are struggling to keep their homes out of foreclosure due to higher cost adjustable rate mortgage.

The FHA today issued final guidance that will permit its flagship mortgage insurance program to assist more homeowners stay out of foreclosure due to higher cost adjustable rate mortgage loans.

To ensure taxpayers do not assume the cost of this expansion, HUD's Federal Housing Administration (FHA) will implement a fair and flexible premium pricing structure beginning July 14, 2008. Read more here...

"By charging slightly higher premiums based on risk, FHA will be able to extend the benefits of its FHASecure program to more homeowners affected by the volatility in the mortgage market. Borrowers refinancing into FHA from the subprime market are better off, even with slightly higher mortgage insurance premiums, because FHA insurance gives them access to substantially lower interest rates, and lowers their overall mortgage costs. The difference between the existing 1.50 percent upfront premium and a 2.25 percent premium for a $150,000 mortgage is only about $7 per month. With families turning to FHA in record numbers, the agency is on pace through its expansions to help approximately 500,000 families refinance into its affordable mortgage product by the end of this year."

For a long time now, FHA has been deemed the "A paper" loan for higher risk/subprime homeowners and I've always found it odd that truly someone who may had not established themselves as a low risk borrower was able to borrow money at the same rate as someone who had.

What FHA is doing is fair and long over due...we'll still have flexible guidelines where homeowners with perhaps a few dings on their credit profile can still obtain excellent interest rates and simply pay a slightly higher premium to guard lenders agains default. I applaud the move and believe that many homeowners will benefit along with the expansion of the FHA Secure Program.

We're not out of the woods and won't be for some time, but I think things are heading in the right direction.

B of A Calls it QUITS in Wholesale

Darrell Evans — Sat, 27 Oct 2007 03:04:09 -0700

In August, my wife and I were on our honeymoon in beautiful Maui. We'd left work behind as we'd not too long before leaving got over the fact that AHM was out of business and our pipeline took a hit.

Then on the news this one morning, it caught out attention that Countrywide was ailing too(Uh, oh).

We tried not to talk about this too much because as I said before we were enjoying the beautiful sun, snorkelling, great food and each other on our honeymoon, but my wife and i began to talk about what the trouble could mean.

Shortly thereafter, we learned as many of you did that BofA infused $2 bill into the struggling lending giant, but it wasn't in bonds...it was stock(hmmm).

Why would they buy stock, when in fact if the lender were to suffer further, the bond holders would be the first takers(if bk happened) and stock holders could be left holding the bag? (although preferred holders are ahead of the commoners)

Could BofA be positioning itself to swoop in like an eagle on it's prey to gobble up the industry kingpin while it's on a standing 8 count?

Hang on...the picture gets fuzzier...I turned on my direct tv pay per view in September and while I can't say for sure how many weeks they were there prior(because i don't watch to much ppv), but B of A was on 24/7 on channel 115(the channel in my area, right before you see the ppv movies start to line up). what were they doing?

you guessed it - advertising their "no fee loan program" - not too long ago, they changed it to their REFI Event. (ah man)

Countrywide's wholesale chief said not too long ago about the industry's bias toward retail lending and they've definitely beefed up their marketing both on and offline. Now, the nation's second largest bank is on Direct TV 24/7 for weeks during sept.(and who knows how long before) PAY ATTENTION IN THE ARTICLE BELOW ON HOW MUCH LOAN VOLUME WAS GENERATED THE LAST 6 MONTHS...I THINK IT'S WORKING

Well...here's the news - read it for yourself if you haven't already (cnn money reports)

Bank of America says it will leave wholesale lending early 2008

What makes me wonder is WHO'S NEXT? WELLS, CITI, WAMU, INDYMAC?

I don't believe these banks have the retail power of b of a, but was their (bofa's) exit from wholesale really because they wanted to focus on doubling their market share in retail from 5% to 10% or could it also be that they and Countrywide are about to morph like wonder twins and take the form and shape of a mega bank super power.

i love this industry and i hate to say it but I love the drama that is unfolding...it's really making one think strategically about new ways to compete, gain client trust and loyalty(if there is any anymore), grow business volume and do business in perhaps ways that we've never thought of before...

it's time to get strategic

it's time to learn more about internet marketing

it's time to re-affirm relationships

it's time to build(if you don't already have one) a client for life, "four seasons" business model

it's time to implement raving fan systems and teach/not sell

because you're going to have to decide if you're going to be in the "price game" or the "advice and value game" in order to survive

read, ponder, share, strategize, mastermind

i'm all ears

darrell evans

What Darrell Has To Say About It...

FHA to the rescue, but will it COST you more?

B of A Calls it QUITS in Wholesale