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FHA is NOT the Answer for the Mortgage Industry

By
Mortgage and Lending with Capital Line Funding Group

I know how happy some are now the government has raised the FHA loan amounts but when you want to talk about Government Bailouts - THIS IS IT.  How can a government criticize any lending program with such standards as proposed (exist) as in FHA?  I am sorry they need a reality check or the actual government(we the people) are going to lose the country.

For those of you who are not aware of the qualifications (lack of) for FHA borrowers let me give you just a few NO MINIMUM FICO (a.k.a. no bad credit applicant left behind), as little as 3% down, NO Maximum DTI, cash out refinances to 85%, rate and term refinances to 97%, ALL FHA loans are exempt from declining value areas, NO CASH RESERVES required (is this the worst sub prime program rewritten?????).  It goes on but quite frankly I need to stop and email my congress person because I think someone has a misguided plan for recovery of the housing industry.  Government can't fix it, they only create a problem and exacerbate it through congressional legislation and their "home remedies" (unfounded on sound economic concepts and practical application).

I am sorry FHA is no better than the industry's worst sub prime loan program only now it's a guaranteed Government BAIL OUT from the very beginning.  It's not good for the industry or for the taxpayer.

But you can buy a HUD foreclosure for only $100 down payment, now that's a sweet deal. 

Tony Grego, 317-663-4173 #1 Trade Association for Alternative Inv
REISA - 317-663-4173 - Indianapolis, IN

Hey Pati!

Never thought that FHA is the answer. Just a good place to turn when the big round of sup-prime hit. Current proposals with guidlines will change the ways loan are written along with lenders looking more closely for ability to pay. Just because they fit FHA guidelines does not mean the lender will approve the loan. One great example is the minimun credit score required by many lenders while FHA has none.

Tony

Mar 15, 2008 08:18 AM
Tom Davis
Harrington ERA,DE Homes For Sale, $$ Save $$ Buy Today ! - Dover, DE
FREE Delaware Homes Search!, $$ Save $$ - Find Homes! Delaware Realtor
All interesting points and it should be interesting to see how it all ends up soon.  Thanks for blog.
Mar 15, 2008 08:21 AM
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota/Wisconsin Real Estate Expert
There needs to be some programs to get borderline people in houses.  There are still a lot of good people with limited down payment and marginal credit that would make good home owners.
Mar 15, 2008 08:28 AM
Stephen Graham
Inactive - Atlanta, GA
With down payment assistance programs, FHA is really a 100% loan. As mentioned, you are correct; there is no minimum FICO score requirement. FHA is only concerned with the borrower's last 12 months of credit history. However, FHA charges the borrower MI (mortgage insurance). In my opinion, FHA should be fine since the MI would help offset the costs of defaults.
Mar 15, 2008 09:04 AM
Steven W. Monk
Exeter 1031 Exchange Services - Fresno, CA
V. P., 1031 Exchange Expert

Great information as usual!  Keeps the information pipeline flowing.  There are so many agents that need more information to educate themselves, so they can help their clients make the most informed decisions or at least give them options.  You are great at doing just that, informing the real estate community about their options.

If you have any questions relating to 1031 exchanges or the qualified use requirement, please contact me at:

EXETER 1031 EXCHANGE SERVICES, LLC

Steven W. Monk

Vice President and Regional Manager

516 W Shaw, Suite 200

Fresno, California 93704

Office Phone: (559) 221-2517

Mar 15, 2008 09:17 AM
John S.
RealtorRatingz.com - Canandaigua, NY
Chuck, if you want to spend YOUR money to get "borderline" people into houses, be my guest.  But I don't want to do it for you.
Mar 27, 2008 04:15 AM
Chaz Ramirez
DE Underwriter, VA Automatic Credit Underwriter, VA SAR, Six Sigma Green Belt, Trainer, HUD Title II Approval Consul... - Dallas, TX
I had to responde with a blog:  http://activerain.com/blogsview/443484/Blue-Ink-vs-Red 
Mar 28, 2008 04:11 AM