When our own banking system is at work amazing us with their fancy footwork? Did you hear the move to FHA to avoid the HVCC appraisal code debacle has over taxed the FHA system? Have you heard FHA loans are taking 60 days to close and many files are being denied?
For the first time in years, the FHA funding reserve has fallen to 3%. In 2007 that reserve was 6.4%. Legally, the FHA funding reserve cannot fall below 2% or they have to stop funding. Interestingly, the Fed has determined they won't be propping up FHA further, at least for now. The reason may be due to higher FHA foreclosures with such banks as Wells Fargo, Bank of America and their recent acquisitions who specialized in FHA and Sub Prime. Those same major banks, if you recall, just pulled a number of their riskier products off the rank (manufactured home loans, construction loans, condo loans) and raised their credit standards. Underwriters are now cherry picking files and denying borrowers who clearly fit FHA profiles, just not THAT investor's view.
FHA has proven to be a tough task master; wanting proof for everything imaginable and prosecuting banks like Taylor Bean Whitaker who fell afoul of their systems by closing them down with little warning. VA is also tied to Government loan guarantees, similar to FHA. USDA is guaranteed by the Department of Agriculture, and right now they have a long underwriting time frame causing lost locks and sales contracts falling over. Is there any question why the major banks have announced plans to start their own government backed loan program? Guessing those lenders just want more money faster, huh.
The whipping boy in government backed loan scenarios is the US Tax Payer. WE are the ones propping up loans to banks so THEY don't lose when borrowers default. As a a trader friend of mine put it: the US Taxpayer net = a marked deck!
Racing around for a loan product is starting to look rather undignified these days!
You gotta love the new California Realtors motto: Cope and Complain! Well my way of coping is to keep smiling, keep working and complain to my Congressional Representatives and other bloggers AFTER hours.
Here's how to find your Congressioanal Representative. Tell'em we all said HI!