Rebound time "geter done"

[CARL GUZMAN]

Bush Administration Announces FHASecure Initiative to Assist Homeowners



On Friday, August 31, 2007, President George W. Bush announced a new Federal Housing Administration (“FHA”) initiative - FHASecure - that will assist nearly one-quarter of a million homeowners refinance and keep their homes. FHASecure is a temporary program (all loan applications must be signed no later than December 31, 2008) designed to provide refinancing opportunities to homeowners and to increase liquidity in the mortgage market. Under FHASecure, homeowners with strong credit histories who had been making timely mortgage payments before their loans reset, but are now in default, will be eligible for refinancing.



On Tuesday, the FHA released Mortgagee Letter 2007-11, which outlines the initiative and establishes the eligibility criteria. To qualify for FHASecure homeowners must meet the following criteria:



The mortgage being refinanced must be a non-FHA adjustable rate mortgage (“ARM”) that has reset or will reset between June 2005 and December 2009.
A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
Three percent cash or equity in the home;
A sustained history of employment; and
Sufficient income to make the mortgage payment.


The Mortgagee Letter outlines additional requirements for obtaining a mortgage under the FHASecure program, such as obtaining a new appraisal and qualifying the borrower using FHA’s TOTAL Mortgage Scorecard to assess to the borrower’s ability to repay. In addition, the amount of the FHASecure mortgage may not exceed either the geographical maximum mortgage limits or the loan-to-value ratios outlined in Mortgagee Letter 2007-11. The FHASecure mortgage can include the existing first lien, any purchase money second mortgage, closing costs, prepaid expenses, discount points, prepayment penalties, and late charges. For more information on FHASecure program, click here.

Lets get this market going again now that we may have some buyers in the market and easier loans.

 

[Boatsb]

OK Carl let me get this right.

1) Someone with less sense than I over extended themselves with a loan that I knew about but was smart enough to avoid.

2) they are defaulting because of this decision since interest rates rose and they cant afford the property they bought.

3) My tax money will be used to secure them new loaans so they can keep their property.

If this is all correct what F*^kIN communist decided this was a good idea?

Why should they get bailed out? Why should the business that Fu&k$d them by making the loans get bailed out? It seems they all knew what they were doing as they were " smarter than I because they maximized the amount of house they could afford".

 

[Dodger]

It seems they all knew what they were doing as they were " smarter than I because they maximized the amount of house they could afford".

Yep, who out smarted who?

 

[Nonchalant1]

You asked why the gov't should spend our tax dollars:

The bad loans, made by dumb decisions, were then bundled into mortgage backed securities (Collateralized Mortgage Obligations = CMOs). If they default, large financial corporations and managed funds that bought the CMOs will take a beating and it'll show up in the stock market prices. Large financial corporations and fund managers contribute to political campaigns and hire lobbyists. Our government, unfortunately, responds to political donors and lobbists.

Any questions?

Doug

 

[Genesis]

It ain't gonna work guys.

Look at the criteria again.

There are two problems, neither of which can be fixed.

1. People bought houses they can't afford. They can't requalify on any REASONABLE mortgage, FHA or not. Their DTI numbers won't work on an indexed payment and they're upside down. End of game. This garbage was "enhanced" into AAA credit with swaps, which should have never been done, but it was.

2. The commercial paper market also got overrun with swaps instead of hard assets.

Both of these problems WILL unwind; it cannot be prevented.

Rebound? No. An attempt to be "politic" to those who are in the middle of it? Yes. Will it fix the markets or housing? No. Will we still get a nasty recession with all that implies? Yes.

 

[(Nobody You Know)]

Will it fix the markets or housing? No. Will we still get a nasty recession with all that implies? Yes.

But not until after the 2008 elections.

Bush implemented a clever political strategy which, BTW, puts no time limitations on the "temporary" adjustment of banks asset/lending ratios.

Personally I think the stockholders of these "troubled" lending institutions should pay for their investment stupidity.

Don't worry about me though, I'll be hanging in the wings waiting to pick up distressed property opportunities again just like in 2001 and 2002. Realtors not to worry. There will be more opportunities.

 

[CARL GUZMAN]

I do agree with you Karl the new letter from FHA has it's problems as far as borrowers go they still have to go full Doc and show there true income and most people that have already purchased a home are stated income deals. and don't make enough to qualify full Doc? So maybe it's just a patch to help a limmited amount of clients that fall into that category.
The problem still exists with fraud , many bad Mortagge Brokers are now sending all there crap to FNMA/FHA as full doc , when it's fraud. In the Mortgage business there is a form 4506 that your borrowers fill out saying there taxes are correct and true but FNMA/FHA is not enforcing it because it takes too long to verify with IRS? When they do check a file at some lenders it's one out of twenty?
I'm not sure a bail out is the correct thing to do but we have to do something before we go into Recession? And I think some fault is with lenders makeing there small print even harder to understand?

 

[thoward]

On the RE rise we sold a rental house. Missed the peak by 6 months and that cost us $30K. I saw this happen in the early to mid '90s. Prices went so far backwards my uncle could not sell his house for what he had in it, and he built it! People were watching too much "Flip this House" and now it is the time to pay the pipper. Developers are still at it as they know they can't get another deveolpment loan so they have to push forward and hope for the best. I guess they can always go bankrupt...... One of the houses we are looking at is in foreclosure. The guy maxed out the loan to buy property and build a house free and clear. Now he can just walk away! It is going to get worse too. The agent we are working with tells me it costs about $40K to foreclose. There are so many loans in defualt the banks have no choice but to work with the borrower.

Scott look at it this way, It is a really good time to invest in other peoples stupidity. You can get it for pennys on the dollar thanks to the Gov. bailout.

 

[Boatsb]

I guess if you look at it that way I can benefit from others screwups. Maybe not the most benevolent attitude but no one else seems to be looking out for me. Oh no I am being turned into a politician. Any hookers on the site? Just don't tell my wife.

 

[spartonboat1]

Re: lobbyists, a couple years ago a group put up a job opening in WDC (true story) for $900k and could get no takers. Wize sage tells them, "no self respecting lobbyist is going to come for under a $mill". I assume John Engler is not suffering...no, this is not a diss...