FHA Cushion Still Low
The Federal Housing Administration won’t need help from taxpayers even though their cash reserves are still below the level required by law, federal officials said Monday.
As of Sept. 30, the agency’s reserves were estimated to be at $4.7 billion, up from $3.6 billion a year ago. This is a 0.5 percent margin, significantly below the 2 percent the law requires, but federal officials don’t think it is a problem because it is the result of the FHA insuring more loans.
According to a report to be submitted to Congress on Tuesday, FHA has tightened its regulations and expects that its margins will be above 2 percent by 2015.
Source: Washington Post, Dina ElBoghdady (11/16/2010)
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC
Some Guarantee Will Survive Fannie, Freddie
The dominant thread at the conference earlier this week on the future of Fannie Mae and Freddie Mac, hosted by Treasury and the U.S. Department of Housing and Urban Development, was about retaining FHA to ensure finance availability for lower- and moderate-income households and re-shaping Fannie and Freddie into something that backstops losses after private insurers take their lumps.
At least for the near term, most of the academics and business leaders participating seem to agree, some form of government backstopping of the mortgage market is necessary, but it won’t be under the terms that we’ve grown familiar with. Rather, the guarantee would be absolutely explicit, not implicit like we saw with Fannie and Freddie, and, in the view of some, would take the form of a limited, maybe even catastrophic-type, backstopping in which the private sector takes first-risk position.
The government-backed secondary market companies would adjust underwriting and terms to provide counter-cyclical restraints (tightening standards as appreciation rises too far from historical norms) and ensure without question that they would have the reserves to meet their commitments to investors should loans go bad. In a pure market, that would mean costs would rise far too high for most borrowers to afford financing, but with the government’s support, costs would be brought down to a level
appropriate for the great middle of the market. FHA would be retained to play its role making safe, affordable financing available to lower- and moderate-income borrowers.
Would the secondary mortgage market companies be pure government entities like FHA or pure private companies? Not clear, except that Geithner said in his opening remarks that the days of private gains subsidized by public losses — the Fannie and Freddie
models — are over. Perhaps, as Alex Pollack of the American Enterprise Institute said, the GSEs should be divided into three entities: purely private companies for packaging mortgage-backed securities for Wall Street investors, pure government agencies for meeting public policy goals of homeownership, and third entities for liquidating the existing GSEs’ bad debt.
All agree that lack of transparency was one of the great culprits of the mortgage crisis. Borrowers didn’t know what they were borrowing, investors didn’t know what they were investing in, and no one knew whether the federal government would actually step in should a crisis occur. To correct these shortcomings, transparency would have to be a hallmark of any reform. “We need transparency, standardization, and disclosure,” said
Susan Wachter of the University of Pennsylvania’s Wharton School.
Vince Malta, NAR vice president and liaison to government affairs, was present on behalf of REALTORS® on the second day of the conference.
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.
Report to Reveal Appraisal Fees By County
The monthly Appraisal Fee Reference reports issued by a la mode Inc. list median appraisal fees for 3,000-plus counties and districts in the United States, Puerto Rico and Guam.
The goal is to help lenders satisfy FHA guidelines dictating that appraisers be paid “reasonable and customary” fees. It also aims to help them comply with updated Real Estate Settlement and Procedures Act rules governing changes to estimated costs.
Source: Inman News (02/22/10)
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.
FHA Relaxes Anti-Flipping Rule
Beginning Feb. 1, the Federal Housing Administration will provide mortgage insurance for some purchases in which the seller bought the property and held it for fewer than 90 days.
The agency is changing what is known as the “anti-flipping rule” to speed up sales of renovated homes in communities with too many bank-owned and foreclosed homes, says FHA commissioner David H. Stevens.
Waiving the 90-day rule will encourage private investors to buy vacant properties, fix them up, and quickly sell them to buyers who will be eligible to buy them using FHA financing.
FHA’s change “is going to be absolutely terrific” for first-time home buyers hoping to take advantage of the tax credit, says Bobby Taylor, an associate with Coldwell Banker Mountain West Real Estate in Salem, Ore.
Source: Washington Post (01/30/2010)
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.
NAR: FHA Key to Housing Market and Recovery
The Federal Housing Administration mortgage insurance program is a critical part of the American housing fabric and has never been more important than it is in today’s market, NAR President Vicki Cox Golder told a congressional panel this week.
Testifying before the House Committee on Financial Services, Golder said that the FHA program is fiscally sound with responsible underwriting, and needs enhancements not radical reform. She urged Congress and the administration to tread lightly before making changes to a program that has a profound impact on economic recovery and serves the nation’s families.
“With the collapse of the private mortgage market, the importance of the FHA mortgage insurance program has never been more apparent. Thus far in 2009, nearly 80 percent of all FHA insured purchasers are first-time homebuyers. And if you take a closer look at the numbers, you’ll see that program is doing exactly what it was designed to do—make more affordable mortgage financing available to homeowners,” said Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. Full Story….
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.