FHA Doesn’t Give a Damn About the Consumer!

Changes to the FHA program are going to limit the number of borrowers that can qualify.

I have been doing FHA mortgages for a long time. I have advocated for this type of financing for many of my clients, as it was the best solution for them, especially for first time home buyers.

FHA will soon not allow a homeowner to cancel the monthly mortgage insurance after a certain time period and once they had a 22% equity position in their home. Those days will be over shortly. Once they have mortgage insurance, you are stuck with it, unless you sell or refinance. Why should the consumer have to make either decision, to get out from under the monthly mortgage insurance?

I am not saying that I will never do another FHA loan, but nowhere near as many as I used to do. If FHA is working toward rebuilding its reserves, how do they accomplish that, by doing much less business?

This article, FHA to tighten underwriting, raise premiums, By Inman News provides the details on the new changes to FHA. 

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Greeneyedbandit February 11, 2013 at 01:11 AM
so would it make more sense to go with a conventional loan which has a little big higher rate?
Joe Petrowsky February 11, 2013 at 09:57 AM
A conventional loan would be a better alternative. in spite of the rate being slightly higher.
Greeneyedbandit February 11, 2013 at 03:28 PM
so in the long run which one would cost you more money over a 30 yr period.
jane February 11, 2013 at 05:45 PM
I'm sure that as a real estate agent this is disheartening news. As a taxpayer that is still bailing out consumers that gave little thought to the mortgage papers they were signing I say smart move. I'm glad a government agency it looking out for the taxpayer's burden of future non-compliant mortgage holders.
jane February 17, 2013 at 10:40 AM
Joe - I revisited this after just reading your blog from 2 days earlier. Kind of hard to figure out where you sentiments really are on this. 2 days earlier you were aghast that the FHA would allow the taxpayers to be on the hook for bad mortgages: "Although I have been following this story for a while, it is now going to be reality starting in March. Here is the deal, if you have a mortgage owned by Fannie or Freddie, current on the mortgage payments, under certain circumstances, you can walk away from the debt and once again, the taxpayer picks up the tab." And yet today, you think it's wrong that Fannie and Freddie would try to remain insured against bad mortgages. I guess this is bad because it might cut into your profits. Definitely a poster boy for the Republican party - they would be very proud of you.


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