I AM LIVID AND YOU SHOULD BE TOO!!!!!!!!!!!!!!!!!
An excellent post written by Pat Haddad on how the polices of HUD are hurting consumers in todays market, she's right, it appears no one thinks these things through the whole way before implementing the new "rules"
HUD is the PREDATOR now!! Lower income Homeowners whose loans are up to $159,000 cannot refinance even with a 1% reduction in their rate!!
FHA guidelines dictate that if the savings in an FHA refinance does not result in a minimum of $50 per month savings, they will NOT insure the loan….therefore, the homeowner CANNOT refinance. THIS MEANS IT DOESN’T HAPPEN!!!!!
The changes that took effect on 10/4/2010 ( “WARNING!! On October 4, 2010 Some of Your Buyers Will Vanish!” ) that reduced the Up Front Mortgage Insurance from 2.25% to 1.00% and increased the ongoing Mortgage Insurance Premium from .55% to .90% not only increase the financial benefits to HUD, but more importantly, allow fewer FHA homeowners, particularly lower income families to refinance.
The numbers show that, because of this change, even in a streamline refinance (no appraisal and income verification), a reduction in the rate of 1.00%, if the loan amount is less than $160,000, the savings will be less than $50 a month.
Comparatively, prior to 10/4, homeowners with loans in the $90,000 range and higher could take advantage of the lower rates and save $50 a month with a rate reduction of 1.00%.
So why did HUD do this?
Did they calculate the impact of this change on lower income homeowners who own below average priced homes? I can’t imagine not!!
When HUD can borrow money at a fraction of a percent, is it possible that HUD did not realize what they were doing? I think not!!
HUD did this clearly knowing what they were doing. HUD knows that 80 to 90% of FHA borrower loans are below $160,000 and they prefer to keep the rates at the higher rate. I call that greed!! I call that insensitivity to the bulk of their insured portfolio of hard working families particularly in our current economic tough times. Just who is watching out for the little guy???
Shame on you HUD!! Shame on you HUD Secretary Shawn Donavan and shame on you Assistant Secretary and FHA Commissioner David Stevens for allowing this to happen!!
HUD IS THE PREDATOR NOW!!!!!!
Pat Haddad, ABR, CDPE, CRS, e-Pro, GRI
Haddad Team, Keller Williams Realty
317-840-7555
Indianapolis real estate and the surrounding areas of Carmel, Fishers, Geist, Morse, Noblesville, Westfield, Zionsville, and everywhere in between! Whether you are buying or selling an Indianapolis home, I'll be with you every step of the way.
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