Renewed Attention to Halting Foreclosures
With foreclosures continuing to rise, Rep. Joe Sestak (D-Pa.) hopes to spark interest in a bill that would give borrowers who owe more than their homes are worth new FHA mortgages.
The Homeownership Vesting Plan Act—which received little attention when first introduced in March—would pay original lenders the difference between the old and new loans over the next five years, and pay mortgage servicers $1,000 for each loans they agree to convert, while borrowers would get a lower rate on a smaller loan.
Crafted to reduce foreclosures and help keep home prices from sinking further, the legislation seeks to pay for the $50 billion initiative largely with unused TARP money that was set aside for less successful home-loan workout programs.
Source: Philadelphia Inquirer, Joseph N. DiStefano (10/16/09)
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Will Taxpayers Have to Bail Out FHA?
The Federal Housing Administration stepped up to guarantee low-down-payment mortgages for riskier buyers after the mortgage market crashed. Now with many of them in default, the FHA’s losses have mounted, and it’s possible that its reserves will fall below the 2 percent level required by law. If that happens, taxpayers may have to bail out FHA.
Some housing analysts believe that this will lead to tighter restrictions on FHA mortgages. “It absolutely changes the political dynamic once you have to ask taxpayers” for money, says Lisa Marquis Jackson, vice president for John Burns Real Estate Consulting.
Source: The Wall Street Journal, Nick Timiraos
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FHA Loans Set Record
The Federal Housing Administration guaranteed 186,000 mortgages in June, a record number in its 75-year history.
FHA loans are popular because they are one of the few sources of low-down-payment mortgages. In the last year, they have accounted for about 46 percent of all mortgage applications.
Along with increasing numbers of FHA activity comes a rising number of delinquent loans, with the level of FHA mortgages in some stage of foreclosure reaching 7.4 percent in May.
Source: The Wall Street Journal, Nick Timiraos (07/20/2009)
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