Who Needs Conspiracy THEORIES?

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Mortgage and Lending NMLS #94045

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!

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SUSAN TEMPLETON IS A LICENSED LOAN ADVISER IN WASHINGTON

NMLS# 94045

                 

 

Interest rates and products are subject to change without notice and may or may not be available at the time of loan commitment or lock-in. Borrowers must qualify at closing for all benefits. Loannetter is a private brand owned and copyrighted by Susan Templeton.

 

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Topic:
ActiveRain Community
Location:
Washington
Groups:
Mortgages
Construction
The FHA Mortgage Group
VA Loan Group
HUD RURAL Loan
Tags:
tough market
fha reserve funds
fha guarantee

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Ambassador
2,745,009
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I'm was not aware that FHA was a guarantor of the FHA loans.  Unlike VA, I thought that FHA loans were "insured". 

 

Sep 08, 2009 09:38 PM #1
Rainmaker
596,993
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

I think Lenn's right on this one, Susan.  Correct us if we're wrong.

Sep 08, 2009 10:27 PM #2
Rainer
138,317
George & Arlene Paukert
Road to Wealth, Inc. - West Palm Beach, FL

I think the government was trying to force more and more buyers in to using their product (FHA) and now realized they can't handle it. I think the government needs to stay out of private business or we are going to see more and more problems. How many 1st time home buyers are going to back out of their contracts when they realize their FHA loan can't or won't close by November 30th?

Sep 08, 2009 11:13 PM #3
Ambassador
605,841
Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552

FHA has been the vehicle that kept the housing market from drowning.  We haven't seen the bottom yet if the government lets FHA run out of insurance money.

Sep 09, 2009 12:40 AM #4
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hi Lenn,

Correct: FHA insures using MI fees. Insurance 'translates' into a guarantee to the lender against default...(my terminology here) similar to VA (which also has an MI fee) both loans access the same funds.  The Veteran's Adminstration has obligation to assist qualified veterans so they guarantee the loans. Do lenders see this differently? Not sure. FHA is by far a much bigger engine.

Either way the fact the FHA reserves are so low and may be cut off is a real caution to anyone expecting the FHA train to keep going. It just can't!

Sep 09, 2009 08:18 AM #5
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hi George, I agree....we are in for some rude surprises! Nothing like getting comfortable to find out your  44/45% DTI is not OK with your lender. Seriously, we have enough challenges.

Buyers should be strongly warned about using their credit for anything from the moment their loan application goes to underwriting until AFTER they get their keys. waiting. A borrower who 'gets tired of waiting' may find their credit impacted if they were on the line. Danger! Warning! Will  Robinson!

Sep 09, 2009 08:25 AM #6
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Brian, "If" or "when" FHA falls over? So many failures these last two years were unforeseen. With our US population decline in reverse relationship to the cost of living increases, with fewer workers pahing to keep systems like Social Security funded... the age of conspicuous consumption could be...over? 

Sep 09, 2009 08:31 AM #7
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Rainmaker
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Susan Templeton

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