THE WORD FROM FHA. . . . . THE FHA INSURANCE FUND WILL RECOVER IN TWO OR THREE YEARS!!!
Most of us in the Real Estate Industry received this news from FHA last night with a thud. It's quite scary what this could imply for our industry. It does not bode well as FHA Lending is the primary mortgage product.
Trying to think positive thoughts on this one, but the venerable Lenn Harley, a well respected broker from Maryland, put it best when she asked, "IS THERE A PLAN IN THE GOVERNMENT OF THE UNITED STATES OF AMERICA TO TOTALLY WRECK THE AMERICAN HOUSING INDUSTRY to a point where it will not recover and that the government can take over everything, absolutely everything?"
What are your thougts and fears? Or do you have a positive view? I wanna know...
THIS IS SIMPLY ADDING INSULT TO INJURY TO THE AMERICAN ECONOMY!
FHA ADVISES:
The new audit shows that even without any new measures, the reserves will rebound to the required level within two or three years largely as the result of the recovery in the housing market, Stevens said. This calculation is based on projections of future home prices, interest rates and the volume and credit quality of FHA's business.GOOD GRIEF! This will effectively put FHA insured financing on hold for TWO OR THREE YEARS.
JUST WHAT IS FHA DOING THESE DAYS??
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September 18, 2009
HUD ANNOUNCES $300 MILLION IN RECOVERY ACT GRANTS TO CREATE GREEN PUBLIC HOUSING
Grants will increase energy efficiency, reduce costs of public housing while creating green jobs
DENVER - U.S. Department of Housing and Urban Development Secretary Shaun Donovan announced $300 million in Recovery Act competitive grants today that will allow 36 public housing authorities across the U.S. to utilize green materials and technology to create public housing that conserves energy and encourages more healthy lifestyles. (See list below.)* * * *
September 3, 2009
WASHINGTON - U.S. Department of Housing and Urban Development Secretary Donovan today announced that HUD is awarding $96 million in grants to 15 public housing authorities across the country to make substantial improvements to thousands of public housing units nationwide (see below for full list of grantees).
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OTHER THINGS HUD HAS BEEN DOING. SEE Table of Grants HERE
EXAMPLE:
CA LOS ANGELES COUNTY $8,080,528 CERRITOS CA LYNWOOD $422,882 CA MADERA $260,115 CA MARIN COUNTY $431,056 CA MERCED $336,919 CA MILPITAS CITY $157,293 CA MISSION VIEJO $132,793 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
IS THERE A PLAN IN THE GOVERNMENT OF THE UNITED STATES OF AMERICA TO TOTALLY WRECK THE AMERICAN HOUSING INDUSTRY to a point where it will not recover and that the government can take over everything, absolutely everything?
Without the ability to issue FHA insured mortgage loans, many mortgage companies will simply shut their doors because far too many home buyers across the country will not qualify for conventional loans. There are already severe constraints on mortgage companies by denying loan officers the ability to order appraisals giving more and more power to "third party" appraisal management companies. It appears that any employee of a mortgage company whose income is commission based cannot have anything to do with the appraisal process. Performance based income is honorable and enables employers to share profits with employees, thereby giving commission based employees an opportunity to earn more for harder, smarter production.
Mortgage companies and real estate companies have been commission based for 100 years. Where are mortgage companies going to get the capital to finance salary based staffing? Banks are not lending money. IS HUD GOING TO FINANCE MORTGAGE COMPANIES? HA!
Many otherwise qualified home buyers will not be able to find a home for themselves and/or their families because the bar for conventional financing is so high that the qualifying process and appraisal processes hava narrowed the buying pool.
IF FHA GOES DOWN, I PREDICT THAT A SIGNIFICANT DROP IN HOME VALUES WILL FOLLOW, thereby further diminishing the wealth of the American citizens.
As home values continue to decline, more and more home owners will be trapped by negative equity in homes that no longer provide a viable home or real estate investment for their families. That means more SHORT SALES and more FORECLOSURES. Trapping American home owners in real estate is not the answer. We have a transient employment market and the ability to buy and sell real estate is critical to the success of the American economy.
THE BIG QUESTION IS: FHA is scheduled to be below the mandated minimum capitalization by October 1, 2009. Since FHA refuses to increase the insurance premium to cover the risk of newly insured loans.
WHAT IS THE PLAN? One thing for sure. . . . waiting for 2 or 3 years for the insurance fund to recover WILL NOT WORK.
"Mary, didn't you and John plan to sell your home and retire to Florida this year?"
"We can't now. We have lost our nest egg. Our home isn't worth enough now.
We may have to move in with our daughter and her family."
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