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07 Aug 09 FHA Having Trouble Insuring Reverse Mortgages

The increase in FHA funding authority means the government is following the marketplace. FHA mortgages now represent some 35% of all new financing, up from about 5% just a few years ago when the program was crowded out of the marketplace by bad credit loans. It would be counterproductive to restrict the program when FHA loans enjoy great public confidence, especially FHA loans for borrowers with poor credit. In this economy we need home buyers, reason enough to encourage people to enter the marketplace.

Reverse Mortgages: what HUD calls home equity conversion mortgages (HECMs) — those reverse mortgage loans remain attractive for many senior borrowers, but have become troublesome for HUD to insure because of falling home values. While HUD asked Congress for $800 million to subsidize the reverse mortgage program this year, Congress in this bill is saying forget it. Instead of more money, the bill requires HUD “to ensure that the program operates at a net zero subsidy rate.” Given that reverse mortgage are amazingly risky to insure in a slow market what can HUD do to meet the net zero requirement? It can cut back on the number of reverse mortgages it’s willing to insure, it can reduce the maximum amount it will cover, or both. The bottom line: If you want an FHA-insured reverse home loan it might be best to get one before October 1st, the start of the new fiscal year.  Read the rest of the article at FHA Loan Pros.

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13 Jan 09 Home Mortgage Lending Guidelines Tighten

Unfortunately with default rates breaking records every month, lenders are tightening guidelines more and more.  Many mortgage lenders start revising guideline requirements with their wholesale mortgage products.  Most lenders start by increasing the home equity requirements for cash out and rate and term refinancing.  Most mortgage lenders will also increase the credit score requirements, especially on the stated income or jumbo mortgage loan products.  Now with cash out FHA loans, lenders are requiring 2 full URAR appraisals to meet HUD product modification requirements.  Get the latest interest rate updates and mortgage news reports as they happen.

Many California homeowners residing in high cost regions are unhappy with HUD lowering mortgage limits.  The 2009 FHA loan limits are being lowered but HUD assures Mortgage Related News that millions of borrowers will still benefit from these FHA loan programs nationally.  FHA announced the new ceiling in the high cost markets will be $625,500.

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