Comments on: Upcoming Changes with FHA Mortgages http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/ Seattle's Leading Resource for Real Estate Information Sun, 08 Nov 2009 01:47:42 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Kary L. Krismer http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-323777 Kary L. Krismer Sun, 24 Aug 2008 22:23:15 +0000 http://raincityguide.com/?p=1927#comment-323777 Roger, I apparently missed your post above until now. I would call these so called "charity" scams an exception to the 97% rule, effectively allowing 100%. I found this thread again because of this article in the Seattle Times. http://seattletimes.nwsource.com/html/realestate/2008132680_downpayment240.html Spin, spin and more spin. They make these scams seem legitimate. They even claim that the higher defaults aren't due to the programs, but due to the inflated price. Properties don't go into default over a 3% difference in price! Roger, I apparently missed your post above until now. I would call these so called “charity” scams an exception to the 97% rule, effectively allowing 100%.

I found this thread again because of this article in the Seattle Times.

http://seattletimes.nwsource.com/html/realestate/2008132680_downpayment240.html

Spin, spin and more spin. They make these scams seem legitimate. They even claim that the higher defaults aren’t due to the programs, but due to the inflated price. Properties don’t go into default over a 3% difference in price!

]]> By: The Housing Rescue Bill | Seattle Real Estate ~ Rain City Guide http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-322601 The Housing Rescue Bill | Seattle Real Estate ~ Rain City Guide Wed, 30 Jul 2008 20:03:56 +0000 http://raincityguide.com/?p=1927#comment-322601 [...] FHA risked base mortgage insurance pricing (which I’m in favor of) that was to be effective last week is now postponed until September [...] [...] FHA risked base mortgage insurance pricing (which I’m in favor of) that was to be effective last week is now postponed until September [...]

]]> By: Roger Ingalls http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-322234 Roger Ingalls Wed, 23 Jul 2008 19:06:40 +0000 http://raincityguide.com/?p=1927#comment-322234 Kary: I wouldn't say that FHA loans are 100% loans. FHA requires a 3% down payment. FHA allows gifts as a source of funds for down payment, but they have rules regarding those gifts. Generally, they are OK if those gifts come from family members, employers or community based charities. It CANNOT come from the seller, but the seller can contribute to closing costs. When the down payment is truly a gift, the buyer has 3% "instant equity", at least in theory. These loans appear to be performing reasonably well. When the gift comes thru a "enabler" charity, such as Nehemiah, and the sales price is raised 3%, to allow the seller to "launder" the downpayment through Nehemiah, then you are correct, there is virtually no equity. These loans are performing poorly. There is pretty strong political support for these programs, and the main proponent of doing away with it is the FHA, which is seeing deliquencies in these 100% programs escalate. Since FHA is NOT a government giveaway, but is entirely supported by the premiums they charge, they should be allowed to curtail this program to ensure their OWN survival, and limit their losses from payouts on defaulting loans. It will be interesting to see what happens. Kary:

I wouldn’t say that FHA loans are 100% loans.

FHA requires a 3% down payment.

FHA allows gifts as a source of funds for down payment, but they have rules regarding those gifts.

Generally, they are OK if those gifts come from family members, employers or community based charities. It CANNOT come from the seller, but the seller can contribute to closing costs.

When the down payment is truly a gift, the buyer has 3% “instant equity”, at least in theory. These loans appear to be performing reasonably well.

When the gift comes thru a “enabler” charity, such as Nehemiah, and the sales price is raised 3%, to allow the seller to “launder” the downpayment through Nehemiah, then you are correct, there is virtually no equity. These loans are performing poorly.

There is pretty strong political support for these programs, and the main proponent of doing away with it is the FHA, which is seeing deliquencies in these 100% programs escalate.

Since FHA is NOT a government giveaway, but is entirely supported by the premiums they charge, they should be allowed to curtail this program to ensure their OWN survival, and limit their losses from payouts on defaulting loans.

It will be interesting to see what happens.

]]> By: Kary L. Krismer http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-322223 Kary L. Krismer Wed, 23 Jul 2008 16:15:09 +0000 http://raincityguide.com/?p=1927#comment-322223 I was focusing on the "charity" source of down payment. Those make FHA loans basically 100% loans. I was focusing on the “charity” source of down payment. Those make FHA loans basically 100% loans.

]]> By: Roger Ingalls http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-322221 Roger Ingalls Wed, 23 Jul 2008 14:59:40 +0000 http://raincityguide.com/?p=1927#comment-322221 I mentioned that in a comment on his blog. I think there is a greater correlation of delinquencies related to declining property values than to ANY other attribute, and have seen several studies to corroborate that. Of course, this is a self-perpetuating cycle, so it's a little difficult to definitively sort out the chicken and egg question. I would think that foreclosures would track pretty closely to delinquency data. The easy thumbnail conclusion is that people with an appreciating asset do not let that asset go easily, and that people that have equity in a declining asset will go to great lengths to preserve that equity. I mentioned that in a comment on his blog. I think there is a greater correlation of delinquencies related to declining property values than to ANY other attribute, and have seen several studies to corroborate that. Of course, this is a self-perpetuating cycle, so it’s a little difficult to definitively sort out the chicken and egg question.

I would think that foreclosures would track pretty closely to delinquency data.

The easy thumbnail conclusion is that people with an appreciating asset do not let that asset go easily, and that people that have equity in a declining asset will go to great lengths to preserve that equity.

]]> By: Kary L. Krismer http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-322220 Kary L. Krismer Wed, 23 Jul 2008 14:58:37 +0000 http://raincityguide.com/?p=1927#comment-322220 Roger, I think Larry Cragun's recent blog piece is somewhat relevant to your article, if you get into the meat of your article. http://blog.seattlepi.nwsource.com/realestate/archives/141917.asp Roger, I think Larry Cragun’s recent blog piece is somewhat relevant to your article, if you get into the meat of your article.

http://blog.seattlepi.nwsource.com/realestate/archives/141917.asp

]]> By: leanne finlay http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-322218 leanne finlay Wed, 23 Jul 2008 14:51:34 +0000 http://raincityguide.com/?p=1927#comment-322218 Roger, perhaps they needed to add a chart of just where the rising delinquencies are. Ie, are they in Cities with the largest level of foreclosures, and would that mean that people are upside down in their homes, and choosing not to make payments because of that? Roger, perhaps they needed to add a chart of just where the rising delinquencies are. Ie, are they in Cities with the largest level of foreclosures, and would that mean that people are upside down in their homes, and choosing not to make payments because of that?

]]> By: Roger Ingalls http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-322211 Roger Ingalls Wed, 23 Jul 2008 14:27:01 +0000 http://raincityguide.com/?p=1927#comment-322211 Here is a decent article compling info on rising FHA delinquencies. Worth a look. We need to be wary of asking FHA to save the housing market. http://whistleblower.ml-implode.com/?p=22#comment-22 Here is a decent article compling info on rising FHA delinquencies.

Worth a look. We need to be wary of asking FHA to save the housing market.

http://whistleblower.ml-implode.com/?p=22#comment-22

]]> By: Rhonda Porter http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-321763 Rhonda Porter Tue, 15 Jul 2008 22:13:31 +0000 http://raincityguide.com/?p=1927#comment-321763 New mortgage insurance pricing (risk based) is in effect as of today for FHA. :) Here's a copy of <a href="http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/08-16ml.doc" rel="nofollow">the Mortgagee Letter.</a> New mortgage insurance pricing (risk based) is in effect as of today for FHA. :) Here’s a copy of the Mortgagee Letter.

]]> By: Roger Ingalls http://raincityguide.com/2008/06/10/upcoming-changes-with-fha-mortgages/#comment-319602 Roger Ingalls Fri, 13 Jun 2008 19:15:04 +0000 http://raincityguide.com/?p=1927#comment-319602 Re 17 ....good writers borrow, great writers....? :) Re 17

….good writers borrow, great writers….? :)

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