I think I have said before that some, how many I'm not sure, of the subprime loans that were written over the last 2-3 years would have qualified as FHA loans. Most of those buyers would have received fixed rate loans under 7% and would not be facing killer rate increases at this time.
BUT, big but here.
While it is possible that;
all borrowers who acquired FHA loans would qualify for Subprime loans,
It is not believable that;
all subprime borrowers would qualify for FHA loans.
Because they wouldn't! Contrary to some opinions that I have seen lately FHA is not going to replace Subprime lending in its entirety. FHA guidelines, in most cases, are more restrictive than Subprime.
Many loan officers today are just trying to get buyers, with issues, approved FHA because they don't have their old friend the subprime loan. In case you haven't realized it yet some of those buyers just aren't going to get approved. They are going to need to do some work to conform to FHA guidelines, and credit is a great example. The free ride, anything goes, Subprime loan is dead. Why, you may ask?
BECAUSE THEY WERE BAD LOANS!
That's become obvious to most.
To my fellow Loan Officers, be you a lender or a broker;
Take some time to learn the guidelines. Go to FHA seminars, find a wholesale rep who has an abundance of FHA knowledge, go online and read the guidelines, and call the FHA hotline with your specific questions. In short do the work you need to do to market the product. Don't short change your referral sources, ie; your Realtors. They're counting on us!
FHA IS A GREAT PRODUCT!
IT'S WORTH THE EFFORT.
BUT!
IT'S NOT SUBPRIME!
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