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FHASecure - Why has the TV News not jumped on it?

I am just astounded that President Bush has come out and actually gave probably the best answer to the sub-prime problem with our nation today and it has not made it to the news yet. Most people that I have spoken to heard about the FHASecure program from the Internet. It is Saturday night and I have not seen anything about President Bush's statement on TV.

I have to admit that I did not think that the Dept of HUD would make such a drastic change in their program to help solve the subprime problem. I figured that the FED would of had to lower their rates buy as much as 4 to 5% to make any real difference in the subprime market. I also new that if they lowered the rates by that much, the value of homes would start to go up and that is something we just do not need right now.

On Tuesday, FHA is going to send out their "Letter" which is suppose to outline the underwriting guidelines that the new FHASecure program is going to go by. Since sub-prime programs aloud borrowers to close loans without paying collection accounts or charge-offs, I wonder if the new FHASecure Program will allow these people to refinance. It seems like they just may. It looks like they are going to be more concerned with the borrowers ability to make the new mortgage payments or at least I hope so.

Under normal FHA guidelines, FHA treats the refinancing of a 1st and purchase money 2nd as a cash-out refinance. Under the new FHASecure guidelines, we will be able to treat it as a rate and term refinance. The new FHASecure also will allow for secondary financing above 100%. Just these 2 changes are great. I have had many people call me in the past year that took out one of those 125% 2nd mortgages and wanted to refinance the sub-prime 1st mortgage that they had. Well, we could not do it either conforming or FHA. Those borrowers were stuck.

It also looks like the borrower who had made timely payments before their rate adjusted will be able to refinance even though they may be behind on their mortgage payments.

As for those borrowers whose mortgages are higher than FHA Limits, President Bush has asked the Lenders to do their part by refinancing their customers to a fixed rate product. By doing so they just might find out they they will be better off in the long run.

View FHA Notice here

Posted by John Popp Charlotte Home Loan and FHA Source on 09/02/2007 08:28 AM

Comments (69)

fha notice, fha refinance, fha mortgage, fhasecure

69 Comments on FHASecure - Why has the TV News not jumped on it?

SEP

2007

Although I can't agree that the value of homes would increase with a Fed rate drop (FAR too much inventory right now, we'd just stop the bleeding and have more buyers help clean out the surplus for a while), I do agree with most of the rest, especially the title comment... I don't really understand why this hasn't been talked about more, either. Maybe next week's developments will bring it into the picture a bit more.

I guess on a holiday weekend not too much happens. We will have to stay tuned!

John, I agree the price of homes would increase, back up to normal levels

The news won't report it anymore than they will ever retract a false page 1 story other than burying a retraction somewhere deep in the paper.

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Realty
Real Estate - Hemet CA Style

Unless dogs and cats and organ grinder monkeys start qualifying for mortgage loans, it will be a very long time before the new home inventory is absorbed, and all the while that will remain terrible competition for the resale market to have to compete against.

Nevertheless, the president's plan is the simplest, the easiest for everyone to understand, and provides the quickest way to contain the bleeding and get things back on track. Now we'll see how partisan politics can screw it up. I'll guarantee you they're working on it right this very minute.

Dan, Thanks for your reply

Joan, I would like to believe that but I believe that politics are involved, I do not think the Democrats want President Bush to solve the largest national problem since the "fake" gas shortage of the early 70's.

Gary, I agree thanks for the reply.

John O. - not sure what your comment states

Bill, good comment, I think it is to late for politics to really mess this one up. FHASecure did not just happen - it has been in the planning. I also think that the lowering of rates by a half to a whole point in the next month or two will help get rid of the existing inventory. I think that those of us that are left will come out stronger than ever.

SEP

2007

You haven't heard anything about it for 2 reasons:

1. They don't get it

2. He didn't throw a bucet of money at the problem.

You see, he offered a real solution. Well, at least part of it.... and Congress needs to do the rest. The real news will be the $MMs of dollars in pork attached to the bills.

John- What a great post. I am glad it got a gold star. Nothing Bush does now will get any notice unless the media can put it in a bad light. They have an agenda and promoting Bush is not one of them. I do not mean to get political here, however, I am very real and when it gets close to election the Democrats do not care about anything except getting elected no matter at what expense to our country. Katerina

John, thanks for your post, and kudos on the gold star. When the media won't pick it up, we need to get the message out at a grassroots level. I'm sending a letter to my database.

Mike in Tucson

John. The reason the media have not jumped on the matter is because they haven't yet been able to find a home owner who was REJECTED by FHASecure.

Just wait. They'll get to it. It's on their list.

Hi John...I don't know about where you live...but in the NY metro area...this story was played, and played and played then played . Friday, every radio/tv news station carried live coverage --- then played it again. Then it was in the NYTIMES, WSJ, WASH POST, et all... so...three days of coverage in mulitiple formats over a holiday weekend.

And, most people think most politicians are just talking...they want to see real action and real impact...then, right or wrong , they pay attention. A lot of talking has been going on for 7 years or so...and it just keeps churning.

For some reason, signature did not print above...

Thanks for the post and hopefully, some changes will help those that need it. Pamela

Tom, Lester, Nestor and Katrina, Lenn - Thanks for the comments and I agree. I do not think that the news will sit on this story for to long. If they do not help get this information to the public it will be a gross neglegence on their part politics or not.

John,

Enjoyed your post---Don't you think the Democrats wouldn't dare oppose this? Wouldn't be healthy for what they supposedly stand for. I sure hope it brings relief to the masses.

Unfortunately, good news does not sell newspapers, or bring in audiences to the TV networks. It's the bad stuff that draws viewers/readers.

Thanks for bringing this to the forefront. I have been able to get first time home buyers and other clients who were priced out of the market into homes due to our high inventory and current price reductions, which is exciting. There's always a positive.

Haven't you heard there is no good news anymore. At least not in the medias' eye. I did catch a short piece by Fox on it though.

Hey John,

I personally believe the New Media hasn't talked about the FHA Secure because it is positive news. The media gets the most attention when they talk about the negative.

Sean Allen
The Mortgage Professionals

I'm really looking forward to seeing how these programs can help. I think we need to see the rates ease too, but that shoud be on the horizon!

John, these are some good answers. Heaven forbid that the news media be responsible and report things that could help the consumer.

I too was surprised that it wasn't plastered all over the news. I guess that job is left up to us.

Maybe because it's positive news? They seem to only want to talk about house sales declining and people losing there homes, How about "This is a great time to buy a home" and how about Great news for those who are about to lose their home, FHA new program can help!

Diane, I hope the Democrats do the right thing and stand with our President to make this new plan work.

Pamela, It is good that the information is making to the publuc is some areas, thanks for letting me know.

Al, Keith, Sean, Kate - I think people in general are a little tired of the type of "news" that we do hear these days. Even the weatherman makes a 5 minute sun shower seem like a level 5 hurrican. Their is no Ethical code when it comes to the news.

Fran, it is nice to hear some good news.

Here is the link to the news release with all the pertinent information. Might be good stuff to pass along to certain clients.

http://www.fha.gov/press/2007-08-31release.cfm

Kelley, thanks for the info - I actually posted the link in an earlier post.

I agree with the sentiment of others that the Media is only interested in negative news. For example, which story has the most effect on Americans, (1) The FHASecure program, or (2) A senator soliciting sex in an airport restroom?

Sex sells, violence sells, disaster sells, etc. The media is obsessed with negativity. Might they consider promoting a story that might actually help our economy? I doubt it.

Dan, I kinda agree. I think that people are a lot smarter today then they were 10 years ago. Does Sex sell - sure it does - That is why Howard Stern is the Media Master. The Local news station should stick to what people really want - Real News.

I was glad to read about the program and have wondered the same thing.I am thinking of emailing the local reporter .

John--- I used to be in the television media when I came out of college, and I believe, its sadly, and likely, because its too complicated for them. They have no idea how to report it so they throw the press release at the bottom of the stack of the other 1000 they got today that dont mention Iraq, the ecomony or Britney Spears, and forget it.

Good post John! Selective news, that's our beloved media. I like all sides of the story myself, our side-their side-and the truth. Thanks for the info.

Gita, Good idea

Aaron, That is pretty sad but funny

Jason, Thanks for the reply

I'm not sure what news channels everyone watches - but it has been splashed all over Florida. I still don't think the plan holds much merit for several reasons, most of all that it will only help a few people, second is that with FHA guidelines most people will have a MTG balance that won't meet that requirement.

Additionally FHA requires MIP regardless of the LTV, and much like pmi, which you don't pay if you put 20% down, that will just add to the payment IF they can meet the ltv for that area.

It's a small band-aid, and one that only helps a few people... most of which aren't in the subprime sinking boat to begin with and won't qualify for help.

Let's just spend more money in IRAQ helping people and letting more of our kids die while they go on vacation... or hey, better yet - fund the new satellite vs radar system for the airline industry. Then again - we could help Lousiana with the funds that TWO years after Katrina have still not been delivered.

I say we kick 'em all out and start over.

We shall see.......

Paula--- I must respectfully disagree.

For one, it is estimated that of the 2 million ARMs that will adjust next year, 500,000 will face foreclosure. According to HUD, they believe this program can help close to 250,000 of them. That isnt a small band aid.

Next, the new program takes into consideration the mortgage balance and allows for a new second mortgage to be put behind they new FHA mortgage to cover this. You only need 3% equity for the new FHA loan but they will allow a second behind that to cover the rest of the balance.

It remains to be seen who will actually do these unsecured seconds, but I would imagine some banks will to avoid the $70,000 or so it takes to foreclosure.

And finally even with the small mortgage insurance premium, FHA requires, when you factor FHA rates, which are in the 6.000%'s today and compare this to what your ARM will look like when it adjusts, 7-12% and higher, the FHA loan is much cheaper.

Certainly its only one small fix but I dont think it should be discounted at all. Its a big step in the right direction.

My opinion ~ Good news doesn't sell as well as bad news.

Expect a blog from me in the very near future regarding this, but Friday's Orlando Sentinel found it more important to say THE BIG SLOWDOWM 'Scary" housing market tumbles which was top of page 1.... yesterday (saturday) had an article saying Washington Tackles Mortgage Turmoil, on page 3

When we start getting decent representation in the main stream media, alot of our troubles as well as our clients troubles will be over!

Brady ~ Orlando Florida Real Estate

Paula, I must add - It looks like both Florida and NY have seen information all over the news - this does make sence - FHA loan limits may by too small for these areas. It makes sense that the news in these areas would put a spin on what President Bush is trying to accomplish. It is exactly what we are talking about. If the news can make it seem like a lost cause then they will talk about it.

I must add that their are plenty of people in these states where FHA will help out. To say that it is a bandaide - well that is just ridiculous. I do not think you understand the seriousness of the problem. People that took out a subprime mortgage as early as 2000 is effected today. This equates to 7 years of subprime mortgage business. Why? People that took out a subprime mortgage in 2000 may have had an adjustable rate mortgage that never adjusted up until the past 2 years. Remember rates were low back then. If you just look at the 10's of thousands of LO's that are out of work - these are just some of the people that made a living writing these loans. Without real help our banking system may not survive.

Well, congratulations! You have #4 and #5 on Google for FHASecure!

I've already heard grumbles from people that just don't get it about how this is just another federal bail-out and all taxpayers will be paying for it. Thoughts?

John, great post!

The bottom line with the current media: "If it doesn't bleed, it doesn't lead!"

Debbie, Thankyou,

It is tough to say exactly how much the FHASecure Initiative by our government will help bailout our country. Until we hear from the Dept of HUD this week, we can only guess as to what new credit guidelines they are going to have. Yes it is a bailout - it is not a handout. They will probably look to the VA Underwriting guidelines where the ability to pay back the mortgage weighs heavily on the approval process. Are the Tax payers going to end up paying for it? I think the taxpayers will pay for some of the bailout just like they do with any national emergency. Katrina was nothing compared to the national emergency we are in right know.

Yes there is a lot of grumbling going on out there. FHA Secure will solve mortgage loans up to a certain loan limit. Probably will be Full Doc Only - maybe they should refinance a borrowers mortgage as long as the borrower has made their past mortgage payments on time - just like they do for FHA Streamline Refinances - we just do not know yet. There are many people still looking for a bailout for the Jumbo Market. It did sould like President Bush wanted the current Lenders who are holding these jumbo loans to refinance them themselves. We shall see what will happen in the weeks to come. As for the oversupply of homes that are on the market - it looks like the FED may take care of that problem by lowering the rates but .5 to 1.5% or so - again we will see. I think the goverment has several different initiatives that are going to come together in the next few weeks - again - we just have to stick it out and make sure the correct information gets to the general public.

This bailout - ANY BAILOUT - is ultimately futile. Until incomes go up or prices come down to where housing is once again affordable with conventional financing, the bloodshed will continue.

At best, a bailout will make things look better for 2-3 mos. At worst, it's good money after bad and will prolong and protract the misery.

In the end, the fundamentals cannot be denied and the correction will continue.

SEP

2007

Robert, I actually agree that housing prices must come in many areas to reasonable levels. In looking at several of the initiatives that President Bush is working on I think this is much more then a short term bailout.

Aaron, I respect your opinion, and your right to respectfully disagree with me, thats how we learn ;-)

Not sure what the FHA loan limits are in Nevada, but in my neck of the woods it won't help any as the limit is 257K and that won't buy or refi a dog house.

Maybe they are thinking of raising the limits though? I'm still trying to find out more info on this program to see if it can help some of my clients.

As a mtg person on this forum, please let us know what you find out. This all happened over a holiday weekend, so we are all scrambling for more info.

Paula Bean

Paula--- Will do. I think the FHA loan limits being raised are an important part of this for areas like yours and I think Congress will pass the bill. As soon as it becomes official, I am sure I will write about it.

SEP

2007

Is it really a political move? I am not so sure. Bush has to look like he cares about "something". And, let's not forget (politically speaking) that the Fed declared that they didn't care about property because "It is an asset", as they poured trillions into the economy, creating a bubble to mimick the dot com boom. One bubble leaks, shore up another.

Anyway, FHA will NOT be a cure all to any great extent. Unless and until they relax their guidelines for insuring loans, there will be no loans to insure. Programs that are necessary for people to qualify for are not available because there is nowhere to sell those packages. Today, even jumbo loans for well healed borrowers are at very high rates (in most places). Alt-a and Subprime program lists look anemic. Low scores don't exist on the rate sheets anymore and hi Loan to Values are gone, as well. THOSE are the people who are looking for help.

So, unless FHA starts to allow 90+ LTV loans on scores lower than 540, raises their loan limits AND the appraised value of the property makes the cut, FHA only makes for nice conversation and offer some carrot of hope. Remember their credit guidelines are also stringent and those (lates, etc) will have to be relaxed, as well.

By the way, this has been ALL over the news where I am.

SEP

2007

I agree with those that state that FHASecure will not be a cure all for OR even come close to it.

In this article FHASecure, it states the difficulty Ginnie Mae/FHA is having in locating buyers on the secondary market. Bond market traders realize the problems they face with the subprime bonds and it is an obvious situation where they will be buying someone else's junk.

I don't believe that this is a case of one mans junk is another's treasure.

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