FHA loans to 5% down? No seller concessions allowed? Rumors? - The government at its BEST again !!!!

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Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

 

 

FHA loans to 5% down?  A 5% down payment for FHA loans?

 

 

fha loans & fha mortgages

 

I totally understand the issues at hand, that many agencies are now having more loans foreclose, that more loans are being lost on the books, and that lawmakers are re-looking at FHA's 3.5% downpayment to possibly raise it to 5%.

Here is the article in question written by Rich Edson of Fox Business. Proposal would boost FHA Down-Payment Requirement.

I have a few concerns, not only what some politician wants to do, but the reasoning behind it. If you read the article,

Here is a comment by Chairman Ben Bernanke.. "I think it’s undeniable that the FHA loans -- because of the low down payments and so on -- are riskier than other mortgages being made, and therefore have a greater risk of loss which would be made up by the taxpayer,”  said Bernanke."

 

 

Bernanke went on to mention this, "You can make the restrictions tougher and tougher, that reduces the risk to the taxpayer -- absolutely.”  “And it reduces the number of people who can get mortgages.”  - BINGO.. it will reduce the number of mortgages that people can get. Then where will the real estate market be?

 

 

confusion

 

Here is why I am so blue and upset, with confusion in the background. We talk about ...

  • the housing bubble
  • homes losing value
  • foreclosures & bank sales
  • people that can't afford their mortgages now
  • skin in the game - larger down payments
  • loans that are becoming harder to close
  • higher credit scores hoping to make better mortgages

 

And the list could go on and on.... but one major question.  Could a lot of what was mentioned above, be attributed to ...

  • job losses? 
  • Less Income?
  • Higher family expenses?
  • Living expenses? (health care?  School?)

 

Overall, if you don't have a job, or lose it in the process of owning a home, or just can't save because the cost of living is increasing... wouldn't this be a larger contributor to what was mentioned above? What about USDA loans and VA loans, that are 100% financing options. Yes, their default rates are increasing. But is it because of 'no down payment'? The economy?  Unemployment? Job losses?

 

 

 

Let's dig a little deeper. I know a loan officer, Gerry Suarez, that has a client that bought a house and used a FHA loan as their choice of financing. She had put 3.5% down, had fair credit scores of 625, and in the last year, she is under water on the house.  She has been paying her mortgage because she can afford making the payments. If she sold her house in today's market, she would owe about $40,000.

My point? She has a job, is responsible, and enjoys the American Dream of owning a home. How come we never read articles about those that put 10% or 20% down, yet went into foreclosure?  It happens and happens more than you would think. I have been giving spreadsheets from other large mortgage companies, showing loans that weren't performing on their books with large down payments. It's scary people. And here is a great example of the government stepping up to the plate, thinking that they know best.

 

One other thing that was mentioned in the article. "The bill, proposed by Congressman Scott Garrett (R-N.J.), would also eliminate FHA financing of closing costs."

First off, this is how rumors start. FHA doesn't allow you to finance the closing costs, except on a 203-k loan. (a few things can be financed per se) You have what is called seller concessions. So I have to assume that this is what the author means, that they want to take away the seller contribution, which is at 6% at this moment. To take it away completely?  And to add insult to injury, have the borrower put down 5%?

 

 

 

jeff belonger speaking at rally in D.C. in late 2008      My thoughts and opinions. -

Do we really think another 1.5% extra, for a down payment, is going to solve this problem?  What about focusing on jobs?  What about welfare checks?  Sending millions of dollars to other countries, to help them, but not helping ourselves.

Small solution? What about possibly lowering the debt-to-income ratios then?  I have recently approved a borrower with 3.5% down, $2,000 in reserves, with a credit score of 710, and her ratios were 38.7% and 47.3%. That means that almost 39% of her money goes to her mortgage payment, to include taxes and homeowners insurance. And that 47% goes to the mortgage payment plus all other reoccurring monthly debt. And this is before taxes !!! But what is missing from this picture?

  --  living expenses, such as food, clothing, gas, electric, gas for automobiles, etc, etc

 

Overall, I know we have many issues that need to be fixed, the housing market is one of them. But every time I see some government official or politician try to get the house and senate to approve something, that could hurt our industry more than help, it ticks me off. What ever happened to common sense? Rhyme over reason? What do you, the American people say?  The tax payers, what do you have to say????

 

 

UPDATE 10/08/09 : continued discussion on skin in the game, having equity or not.  Having a large downpayment or not.  Please read : I Want your Skin in this game !!!  Give me your skin now...

 

 

 

Solutions !!!!

 

(please read some of my solutions below in this comment - click link above)

 

 

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

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______________________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Roland Woodworth 10/03/2009 02:55 PM
  2. Gabe Sanders 10/03/2009 10:34 PM
  3. John Occhi 10/09/2009 07:59 PM
  4. Marlene Shelton-Giles 10/04/2009 03:20 PM
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Ambassador
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

CARLA.... .  you bring up some other good points, such as the black market. It's scary because I am sure that certain people within the gov't call some shots to use money, without other higher up people that don't even know about this.  So how much is just wasted on so many levels, and all is spent outside the U.S.  thanks

ALLISON.... . you bring up some good points. In reality, I didn't really care about those that put 20% down and that they lost more equity, and are under water. You usually weren't suppose to buy a home to live in it for 2 years, and hope that it increased in value, and then sold it for profit. I think too many got caught up in this. I do believe that the gov't is over stepping in the financial issues, using their powers to screw things up overall.. or over regulate.  thanks

MICHAEL.... .  I believe in part of that also... but what will slow down that process of recovery will be the fact that we add more obstacles to financing... such as making it harder with down payments. As mentioned, an extra 1.5% down might not be a lot, but it could be enough to keep more from buying.  and then what?

JAY... . I agree with you 110%, hence why I said we need to focus on jobs.  I just didn't take it a step further, such as you did, by bringing up small businesses.  And that is actually my fault, because I lost some focus on that very point that you mentioned. But it does go back to focusing on jobs, even if it's not small business. Thanks for your feedback. I am going to add the details of small business and not just jobs. So thanks for bringing this up.

LAURIE.... .  I just don't think some think things out. And I do truly wonder about common sense. They make up rules, but without detail reasons to why.  Just because.... because to them, it makes sense. But do they put the pros and cons down on paper? 

 

TIM..... . I agree, that if they lose their job, that DTI doesn't really matter. I brought DTI up because maybe we should have a stronger tier, that if you put more down, that you can have a higher DTI.  But will this solve things, just like putting 5% down?  No, not in my opinion.

In regards to the special interest groups that didn't approve the tiered pricing?  Not sure... I think congress did.  Besides, investors can make this happen, if they wanted to. But they also don't want to price themselves out of the market. I'll look into this more, unless you know.  thanks

 

Oct 04, 2009 05:34 AM #34
Anonymous
anti speeople

on one hand government wants to tighten up requirements to buy a home,  and with the other hand they give you 8 grand!

Oct 04, 2009 05:56 AM #35
Anonymous
anto sheeople

Janet  post 31

 

perhaps u should read why your state is in the crapper

http://www.tampabay.com/news/business/realestate/whos-most-likely-to-walk-away-from-a-mortgage/1037064

 

 

Oct 04, 2009 05:58 AM #36
Rainer
295,458
Stephen Kappre
KW Hometown - Mantua, NJ
Helping You Home

Jeff you got some great comments here, a good variety. Although many comments make some sense, I most closely relate with Lenn's comment. Like USDA - people think it is such a bad thing because it is 100%, BUT if their ratios are 30/40 ... the loan is fine. If someone loses their job, they don't pay their mortgage whether they put 3.5% down or 20% down. Frankly 3.5% down with resserves is far better than 20% down and little reserves. We could continue this conversation for eternity.

Oct 04, 2009 06:38 AM #37
Rainmaker
489,555
Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

What Steve said.

Conservative debt ratios and cash reserves is strong

Oct 04, 2009 06:58 AM #38
Anonymous
John Rilloraza

Jeff,

I couldn't agree with you more about the number of defaults on FHA caused by job losses and just an overall depressing market. During this time significantly reducing the amount of borrowers that can obtain a mortgage would just hurt the economy even more. We all know how depressed home values have become due to the economy, but what has also changed during this time is the amount of loans that have been given or even the amount of qualifiers out there. In California we've stopped using FHA for years because of the strict qualifying guidelines and low loan amounts too low for houses here. The housing market here has continued to decline to accustom these loan amounts because as of now FHA is the most aggressive loan at our fingertips and FHA is the only loan that will not require 10-20% down payment. We have houses worth at 1 time $500,000 the same house is now worth $245,000. I'm not asking to bring the subprime market back but FHA did temporarily increase there loan amounts which "temporarily" helps us in California, however whats to happen when this temporary action is lifted due to tightening loan guidelines?

I think think market is definitely in need of a more agressive loan. For instance instead of going 2 years back on taxes the new loan could require 5 years at the same employer or 10 years this can definately compensate some of the security factors in funding a loan. How about calculating income with other borrowers that are going to live in the house at a fraction if there were not to be on the loan. I'm sure Washington can and has thought of all of this but tightening loan parameters would just depress the housing market even more and cause a whole new wave of foreclosures!

Oct 04, 2009 07:32 AM #39
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Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Many people don't even have 3.5 or 5% down and they do NEED 3-6% seller assist. They have NO SAVINGS or very little savings. How could they ever afford a house with no seller assist? Or 20% down requirement?

Oct 04, 2009 08:42 AM #40
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

WAYNE.... .yes, knee jerk reactions. It would be nice to see the mortgage associations get involved and voice their opinions. I guess time will tell.  And thanks for the kind words.

JOE... .,  I agree, things are out of sync.  What would scare me about a real estate czar is the fact that it would be appointed by today's administration, which I have no faith in... so then what would that do?  thanks

RENEE.... . let me ask you a question.  Are you saying people are going into foreclosure in your market, just because of negative equity?  If that is the case, are you saying that they are just not paying their mortgage payments, because they loss equity?  Or is it because they also lost a job/income?  Or maybe because they lot equity, and were trying to sell because they were in trouble, but can't, hence why they are foreclosing?  Just looking for the reasons why, mentioned above.  thanks

LYNN.... .  I think many of us would agree, saying, would the extra down payment work. ??  But some politician thinks it would be a start.  Question, did they think this out?

LANE.... . I would agree, that borrowers can spend those reserves.  But at least they would have something after the fact, than nothing at all.  And yes, we need to concentrate on jobs.  thanks

ROLLAND.... . keep in mind, this is not coming from banks... so I don't put much into that statement, even when others right about it. This is a politician trying to get it approved in Congress, to make it so banks have to follow this. In regards to the raising of the credit scores.  It could happen. Yes, they are rumors.  WHat's sad is that why go from 620 to 660?  If they moved, they would go to 640.  But this would shut business down. In my opinion, because of the state of the economy, 660 just makes it harder, but it starts with people able to pay for their mortgage. If they qualify with a 620, is 660 going to make it any better?  You need a job to pay your mortgage... 660 would just allow for less mortgages and a real estate market that would crumble quicker... just my opinion.  PS.. those rumors... many just thinking, or thinking that they heard it from their rep. or wholesale rep.

RUSS.... . I bet this is happening and the question would be....  will the investor by them from that lender?  Will HUD insure them?  I know many DE FHA underwriters will lose their licenses soon, from what I have been hearing on what is allowed.  And then you have some underwriters that are being to harsh, and denying common sense stuff or stuff that is allowed by FHA.  You would be amazed.

 

Oct 04, 2009 12:20 PM #41
Rainer
41,691
Terry Osburn
BHHS|Drysdale Properties - Pleasant Hill, CA
Broker Associate

Lenn always has a way of eloquently speaking the truth..........In terms of short sales and leads most of our sellers did not want to lose their homes......They fought. They tried loan modification. They tried other options.

Then came the massive layoffs........

We did not have as many FHA loans as other areas of the country even though they were there and we are starting to see some fall out now but is tied with loss of income.

Rents in our area were mirroring mortgage payments and in some cases higher.....Buyers felt they had to purchase in order to get some type of tax break and savings.....At the height of the buying frenzy we were also getting multiple offers on rentals!   Would list for $2100 and renters would bid up to $2700 in some cases. So if they were paying rents so high it did indeed make sense to own a home. What went wrong was the loan officers encouraging mortgage fraud and lying about stated income.

I don't think the FHA programs were the problem for the most part. It was the subprime loans and the lying and lack of documentation to buy into homes much too expensive for a buyer.

I can remember buyers who could have easily afforded homes in nice neighborhoods but maybe did not have the square footage they would have liked but instead of reassessing their situation on a financial basis allowed themselves to be talked into homes out of their ranges with those pick a payment mortgages........

I talked to one buyer until I was blue in the face but he was determined to get a newer home and all of his friends told him to take the opt a payment program.........He is in trouble today. Many buyers just got caught up in the moment and please do not get me started on those homes that had multiple bids of $100000 or more with foundations unheard of and in need of a total rehab..........

Each market is different and brings about nuances not seen in other markets. We can debate til the cows come home and still come up with different answers and remedies.......

Oct 04, 2009 02:11 PM #42
Rainer
28,039
jason morris
Long Bay Realty, LLC - Murrells Inlet, SC

i have heard thats what is going to happen also. We dont use FHA that often anyway but it does take away an option and we need all the options we can get right now

jason

Pawleys Island sc

Oct 04, 2009 02:41 PM #43
Rainer
38,681
JB Brookman
JB Brookman Photography - Franklin, TN
High School Senior Portrait Photographer

With so many rumors and so much spin in the media, the need for the trusted adviser, like yourself, is more and more important.  Not sure these changes are any type of solution.  Employment and small business health are the foundation to a recovery. Great post, as usual, Jeff!

Oct 04, 2009 03:11 PM #44
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

JUNE.... . again, I agree and disagree.  Some common sense would be say that they need to save.  But FHA loans has been out there for a very long time with a very low down payment. So have VA loans, and USDA loans for the last few decades. All of a sudden we are reaching very high foreclosure numbers in the last 3 years... more now.  And 1.5% down is going to help curb that?  How about jobs... and other issues. 18% rates, 20% rates, 20% down...  the gov't is going to hurt the market with this than help. 1.5% more down won't prevent the extra foreclosures.  Now, I am just assuming, none of us know.  But common sense should prevail. My .02.  thanks for your feedback.

MIKE.... . politics is what has gotten us into a lot of this mess, for the last 4 to 5 years. Many high up aren't experts with these types of financing issues.  And those they rely on?  If they all agree, they are the experts they are seeking.  Those that are opposite, but might be right, are shot down. Yes, politics, ya have to love it... not.

CHRISTINE... . I agree with your assessment 110%, hence why I decided to write about this.  Thanks for your feedback.

 

TIFFANY.... . I am with you 110% on not focusing for the short term. Question, are you for or against the first time homebuyer tax credit?

In regards to the 5% down though. That will not stop foreclosures or curb it. But it will hurt the real estate market more than help it. Especially if you take away the seller concession aspect. We need to focus on jobs, unemployment. Adding 1.5% more down will not help the real estate market or the job market.

So, please tell me how raising the down payment to 5% will help the current issues at hand?  And I really want to know your answer to my first question. Thanks for your feedback.

 

KATE.... . bingo, bureaucrats stinking their .02 in this whole mess. And sure, 95% will work better than more conventional loans, but I think it will hurt the real estate market more though.  Thanks for your input and feedback.

 

Oct 04, 2009 03:34 PM #45
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Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Dude....this is so easy.  Prosecute the frauds in our business and underwrite for performance.  An extra 1.5% won't make or break a deal.  Skin in is skin in!  I don't think that 100% is the way to go, but 3.5% is a big deal nowadays and anyone who invests it has serious skin in the game.  Good stuff JB.

Oct 05, 2009 01:48 AM #46
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

LENN.... . comment # 29... .  I couldn't agree with you more. Yes, Bernanke made some asinine statements. And I think you hit one of the nails on the head. You said.. "IF THE MORTGAGE COMPANY HAS FULLY DOCUMENTED THE BORROWERS INFORMATION AND DETERMINED THEIR ABILITY TO REPAY.  Ability to repay.  What a concept."

Yes, the ability to repay. I think some of us get too caught up on the 'skin in the game' theory and keep forgetting that they still need to be qualified by guidelines.  Now, I will say this... skin or no skin, we should re-look at some of the ratios for qualifying. I will admit, I have seen some higher then they should be, yet the system, the DU or LP system, allows for this.

Overall, why not take the mentality of VA lending.  You have to figure in the family size, utilities, and a few other expense. More work on my end, but you don't hear about VA loans much. And yes, I am sure there have been many that have foreclosed, which goes back to the basic reason why... "Jobs"..."income", etc, etc.  Things that I think are common sense to why we are partially in the problem that we are in.  Here is my thought on this.  Maybe the gov't has a plan to keep picking on lending, such as adding an additional 1.,5% down, just so we forget about the unemployment issues... ???  thanks for your feedback.

 

MICHAEL... . you are saying 10 to 12% in liquid cash if they eliminate seller help also, right?   thanks

 

JANET.... comment # 31.... I always appreciate your comments, but your statements are exactly what the gov't is trying to force feed into our heads. I have talked to many that have gone under water, even with 3.5% down, who are fighting tooth and nail for their houses, even if they are struggling.  Yes, there will be those that will walk away from their homes, if under water, even if they put 3.5% down.  But let me tell you this, I have personally spoken to 7 people in the last 18 months, that said if there was nothing that could be done to reduce their payments, because they are under water, they will walk away from their homes.  And you know what, all 7 of them had put down 15% to 20% down when they bought, a few years prior when the housing market skyrocketed, and who had no trouble paying their mortgages, yet they were going to walk away. Yes, they had stated this to me.

In the last 2 years, I might have spoken to at least 25 to 30 people, that have called me from all over, looking for some help, because they were under water. And out of those, 7 of them said they would walk,even though it wasn't about not being able to pay the mortgage. A few were mad because they couldn't get relief unless they were late on their mortgage.  Some have gone late since then, because of advice from other lenders and or lawyers, and they still haven't been able to get any help. Gee...  I know part of the reason, because you need to prove distress, financial burden, etc, etc... at least with some companies that I know of.

Overall, you make the obvious statement that many would walk away if they had little in, little skin.  An assumption that the gov't has made also. I don't agree with this assumption, because first off, I hate assuming. And I think this is partially smoke and mirrors by the gov't, as I stated to Lenn H., because the gov't hasn't totally addressed unemployment when they talk about foreclosures.  But they knock the mortgage industry and want tighter rules and guidelines. I agree with Lenn Harley, that if they have the ability to pay, that this has been proven by the lender... a full doc...  income, assets, credit scores...  the ability to pay, then the gov't is ignoring the reasons behind so many foreclosures, because they screwed up... yes, I believe that some borrowers from 2006 to now are getting houses that they shouldn't have. I know from 2002 to 2006, many more with Subprime mortgages, that should have never bought (100% with 580 credit scores.. 1 company went down to 560).... no docs to 100%... or the fact that about 30% of all subprime mortgages could have gone FHA...  The gov't forced Fannie Mae and Freddie Mac's hands at extending financing to more people... 100% financing with 53% back end ratios.  Come on, where was the common sense in all of that?  Yet you want to blame it on those that have less skin in the game theory, that more will just walk away?  We need to look at the root of the problem and that is the high employment. I know many that have struggled, yet they still made it work. This usually comes with the American Dream theory, being proud in being a homeowner.  Just my opinion, but if we did a study, I would bet that you would find it more equal that it's split evenly, to those that put little skin and those that put 10% to 20% down, that have walked away.  And where more of the problems occurred. But we don't do this. The gov't thinks they have the answers... yet they ignore or side step the obvious.  thanks for your input. PS.. Janet, did you see this link from comment #36?   Who's more likely to walk away from their mortgage?

 

Oct 05, 2009 03:19 AM #47
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

ANTI...comment # 35.... .  lol... got to love America, right?  I agree...  they are making up their own rules now, and half of them don't agree with the other half of the rules. It seems that they are trying to have their cake and eat it too. 

ANTO.... . I am assuming you are the same person from above.  In any case, WOW... thanks for sharing that article. Most of what I mentioned in my comment to Janet, comment #48, was based on my common sense... and from those that I have spoken to.  Excellent input, so thanks for the link. I wonder if those gov't officials on Capital Hill have read this?  Thanks

STEVE.... . bingo... I couldn't agree more, hence why I wrote this post.  Common sense should prevail here... if you qualify with good ratios, and have shown the ability to pay, then you should be good. People just don't wake up one day and say, "I ain't paying my mortgage. Crap on them lenders for charging me 6% on my house". thanks, and now I have a new blog idea.  ;o)

TOM.... . comment # 38 . .... . yea, you are always copying off of others... lol   Seriously, many of us seem to agree on this.  thanks

JOHN.... . thank you very much for the more in depth analysis in regards to your opinion. I agree with what you had mentioned, and I think many of us do. I am not sure why we don't hear about unemployment much, yet we hear gov't trying to tighten this and that. What about jobs?   Did you read this article by commenter # 36?  WHo's most likely to walk away from a mortgage. Please do, very interesting.

ERICA..... . comment # 40 ... . in regards to your answer, that is why many will say that people shouldn't buy a home then.  What about those that rent and are in the same boat?  I know several people that have bought, struggled, but still made sure they paid their mortgage first... and still found money to upgrade and or do repairs.  I think this happens even in a good economy.  Yet we use these examples as excuses and in my opinion, forget about the main issue... JOBS... Unemployment..  thanks

 

Oct 05, 2009 03:41 AM #48
Rainer
30,706
Art Marine
Mortgage Solutions Financial - Lake Oswego, OR
Loans that Fit your Life

Jeff,

Regarding your coments in #48; I have to agree with Janet.  It is really simple arithmatic.  Lets assume borrower a puts down 20% on a $200,000 house.  Borrower b puts 3.5% down FHA.  Here is their position after closing.

borrower a  loan = $160,000

borrower b  loan = $196,375

Now lets say the market contracts 10%.  Both houses are now worth $180,000.  Which borrower is more likely to default?  borrower a with $20,000 in equity or borrower b with -$16,377.50 equity.  Human nature being what it is, I would bet borrower b is the higher risk.  If both borrowers lose their jobs and can't make the payments, who has a better chance of selling the house before foreclosure?

Oct 05, 2009 05:08 AM #49
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans



Sorry to some, for skipping over in responding to the last 4 comments.. I will get to you shortly.  I wanted to address Art.

 

ART... comment # 50.... you can disagree all you want, I have no problem with that.  I would agree with your comment, if using common sense. But that alone has gotten us in some of this trouble. Your example would make many seem to just pick the one that makes the most sense, which you pointed out. Here is my problem... OUR gov't is doing the same as yourself, yet they don't pay attention to certain studies that are being done. Did you read comment number #36?  Here is the link to an article that you might find opposite of what you are assuming. WHo's most likely to walk away from a mortgage.

Here is another post that I came across today, giving more details. - deliquency and foreclosure study -

Overall...  I truly think this is a main problem within our gov't today.  They either ignore these types of studies or get studies done themselves through agencies that are on the gov't's side... getting paid.  But aren't truly independent.  Did you follow the whole seller-funded down payment issues?  And what HUD and the gov't stated?  That those types of loans were defaulting at a higher rate, 1 for every 3, than regular FHA loans.  First off, two independent studies were done outside of the gov't and both found this information false, misleading.  Secondly, the gov't never did an in depth study to why, such as... how many of these defaults were due to loss of jobs. I would have spent the money for this study.  You know what, to this day, I can't find one study that the gov't has done to show this.  And I have not only talked to many congress people about this, I have been to a few rallies, and I know of someone high up in an organization that has been righting the seller-funded dpa's, and nobody from the gov't has given him a clear answer yet.

 

So...  just to confirm this.. I love common sense.  But in my opinion, the common sense that you are using, which would make sense, is opposite of what you are assuming. And before I even disagreed with Janet, I came to my own conclusions to why this common sense would be wrong, and why we need to do more studies and polls on this.  And the few that are being done now, are reaffirming my conclusions that I wrote about above.   Thanks for your input and feedback, and for continuing this conversation.

 

Oct 05, 2009 05:26 AM #50
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

TERRY... comment #42.. . you make a very good comment about mortgage fraud and those stated programs.  Also, keeping in mind, about those subprime loans that borrowers were misled on, and more in likely could have been put into a FHA loan. I have been saying this for 3 years now, that I would assume that 30% of all subprime loans could have gone FHA.

In any case, there are studies now appearing, telling us what the real reasons seem to be, and not these ridiculous assumptions by the gov't.  Did you read this article?   Who's more likely to walk away from their mortgage?

Overall, you bring up an excellent point, about how so many got caught up in the moment. So many wanted to be like the Jones's, yet were told about these loans such as the Pay Option Arm... and poof... payment went up.  This alone hurt our industry and market.  And yes, in some areas, rent was higher than mortgage payments because of the house values dropping. Thanks for your feedback.

 

JASON M. ... . it certainly does hurt the FHA option if they would not only raise it to 5% down, but discontinued seller help.  thanks

JB... . as someone else mentioned, that small businesses should be a huge concern of ours, and not just employment. And I agree, that these changes mentioned will probably not do much, hence why I had to write about this.  thanks and thanks for that polite compliment.

LARRY.... comment #47 .. yes, continue to spend the money to go after those that committed fraud... and underwrite to perform...  sounds like sound advice, but why is the gov't going in the opposite direction?  Wait, don't get me started on this... and thanks for the polite compliment.

 

Oct 05, 2009 06:19 AM #51
Rainer
6,331
Andrew Sutton
Inter Finance Consortium - California, MD

Inter Finance Consortium is the pioneer of organised financial services in United Kingdom and has established itself as the one of best recognized Finance Firm nationally. Inter Finance Consortium was incepted in the year of 2000. We provide professional services for inbound and outbound business set up. We offer a complete range of financial solutions to our clients. We take care of investment banking & financial planning requirements by providing authentic advice. We possess a team of experts including qualified consultants who ensure to provide most feasible solution to our client financial hitches.Over the last 5 years, Inter Finance Consortuim has grown to be a premier executive provider of bank instruments for professionals both in United Kingdom and overseas.We are in affiliation with so many banks which enable us to provide our clients' need globally. We offer loans,business finance,project finance,bank instruments like MTN,BG,LC,SBLC,PPP,POF,CMO.These services we provide at reasonable rates and conditions from reputable lenders/providers.No chains of consultants as we are in direct contact with the lender/provider.

Oct 06, 2009 01:54 AM #52
Rainmaker
60,344
Paula Reno
Astro Realty (Buyer Agency) - Cedar Lake, IN
Broker, Owner - Cedar Lake Indiana Realtor, Astro

I have sat here for about 20 minutes going thru this blog post. Common sense should tell lenders and buyers what they can and cannot afford. People need to look at the numbers and think what if.

The lenders need to take this in consideration when working with buyers. Keep the buyer in reality and let them know what will happen if they lose there job or how tight it will really be if they buy this house vs that house. We also need to take away the gross pay and work only with the net pay.

Not to insult lenders in any means here but I have seen lenders really tell some bad stories over the years of what people can and cannot afford. I as a person first and realtor second love putting people in a home that I know will be confortable with thier purchase. That includes every month when they make out the mortgage check and know they did good. I don't think the 100% financing is a good idea. I think 3.5 or 5%  does not matter. It is the bottom line of what they can afford every month, with lives regular bumps. Subprime  and 100% financed loans was not a good idea at all.

I could go on with this post for a long time. But I think you all can see where I am going with this.

We All Need to Get back to Reality and Understand the Moral Issues and Responsiblities of Owning a Home..or anything else for that matter.

This is a Great Post, Thanks

Oct 13, 2009 11:59 AM #53
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