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Archive for the ‘Foreclosure’ Category:

Q & A: Are FHA Foreclosures Paid for by Taxpayers?

Posted in Foreclosure | September 6, 2013

Q: Several homes in our neighborhood have been foreclosed. My next door neighbors let their home go when they had to leave the area for new jobs. They had an FHA loan. My husband says that the FHA is a government agency and that the taxpayers have to pay for FHA foreclosures. A: While it’s true that the Federal Housing Administration (FHA) is a division of the U.S. Department of Housing and Urban Development (HUD), foreclosure losses are paid for through the FHA’s Mutual Mortgage Insurance program. The MMI program is paid for by FHA’s borrowers. They pay an up-front MMI premium at closing, which today is 1.75 percent of the mortgage amount, and they also pay monthly premiums. These premiums have been increased several times in recent years to



FHA Loans After Foreclosure: It Only Takes a Year

Posted in Foreclosure | September 3, 2013

Federal Housing Administration (FHA) mortgages are now available to select borrowers only one year after a foreclosure, slashing the previous three-year waiting time by 66 percent. The deal isn’t available to all borrowers and it is tough to qualify after only one year, but the new provision is a major shift away from FHA’s recent restrictions. The U.S. Department of Housing and Urban Development’s (HUD) issued Mortgagee Letter 2013-26 – Back to Work-Extenuating Circumstances,  saying “As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes…FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”



Zero-down Mortgages Are Not Safe — WRONG

Posted in Buying a Home, Foreclosure, Government Programs, Home Loans | May 6, 2013

Conventional wisdom (and the average member of Congress) says that the key to preventing future foreclosure epidemics is making sure that borrowers have more “skin in the game.” That means requiring a higher down payment to buy a home. There are a few things wrong with this conclusion. 1.  According to a 2010 Federal Reserve study of borrowers in Arizona, California, Florida, and Nevada who financed their home purchases with 100 percent loans, 80 percent of defaulters experienced an income shock in addition to negative equity. Of the 20 percent who defaulted solely because of negative equity, the folks we call strategic defaulters, the majority of them didn’t give their homes back until they were more than 50 percent underwater! In fact, the median strategic default decision didn’t take place until the



Homeowner victims of Gulf oil spill consider mortgage relief

Posted in Buying a Home, Foreclosure, Government Programs, Trends | June 25, 2010

Freelance writer Craig Guillot filed this special report from New Orleans Lanvin LeBlanc, a Louisiana fisherman, watched his business come to a halt in early May when federal officials shut down his fishing waters due to the BP-Gulf oil spill. Though LeBlanc owns his own home, he has a home equity loan and wonders what will happen if the fishing situation doesn’t improve. “I haven’t asked for a deferment yet because we’re getting paid by BP, but I can’t say what’s going to happen in the future,” said LeBlanc of Lafitte. “I’ve fished for 30 years, it’s all I’ve ever done…If I can’t fish, I can’t make a living.” It may be too early to say how the oil spill fully impacts homeowners, but Fannie Mae and Freddie Mac authorized



Avoiding strategic defaults as Fannie Mae cracks down on deliberate foreclosures

Posted in Financing, Foreclosure, Government Programs, Trends | June 24, 2010

Guest Post by Eli Dror, a Senior Loan Originator with Georgia-based LSI Mortgage Plus, part of the LendingTree national network of lenders. Prepared  just days before Fannie Mae announced restrictions for borrowers who make “strategic defaults,” this blog post addresses the question of whether homeowners should walk away from their mortgages: The housing market WILL bounce back. Your home is an investment, and investments aren’t always profitable. Think of your 401K or any other stocks you have. Investments go up and down, and selling or foreclosing on your home is equivalent to selling stocks at the bottom of the market. Banks are getting wiser as more people who are capable of paying their mortgage continue to choose to default. There is a difference between someone who is forced to foreclose because



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