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FHA Endangered?

By Brett Reichel

Mortgage and Lending with Homebridge Financial Services NMLS 210215

November 15, 2011 07:22 AM

The news this morning is that if things keep going as they are, the FHA insurance funds could run out by the end of 2012.

Hmmm....What could have been done different? Earlier in the year, HUD instituted higher monthly mortgage insurance premiums on FHA. REALLY high ones. But if their goal was to shore up the fund, this was a mistake. Why? Because it takes so long to get the funds.

A better method of raising funds would have been to increase the Up-Front MIP. This would have increased the funds in the insurance pool MUCH more rapidly.

Let's hope that this mornings news doesn't come true. It would have devastating consequences for the real estate market everywhere!

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Paul McFadden

Responsive Pest Control - Seattle, WA

Pest Control, Seattle, WA.

Brett: One of the things that has happened is FHA is no longer cool. I think it amounted to less than 10% of our total business last month. And yet it had been as high as 35-40% before they increased the monthly MI. I think you're right. Increase the UFMIP and decrease the monthly nut. Thanks for the post!

Nov 15, 2011 08:10 AM

Kathy Stoltman

Ventura, CA

RETIRED

FHA loan buyers at least here locally, are usually looking at lower priced homes and the competition is so fierce with cash buyers or conventional loans, that I agree with Paul's remark above.

Nov 15, 2011 09:11 AM

Sharon Paxson

Sharon Paxson, Realtor® EQTY Forbes Global Properties - Newport Beach, CA

Newport Beach Real Estate

Hi Brett - indeed - if the funds ran out at the end of 2012, that would impact our market for our first time buyers.

Nov 18, 2011 04:10 AM

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Brett Reichel

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