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August 1, 2008

FHA Mortgage Loans Soar in Popularity

Category: FHA Mortgage,Mortgage News – admin – 11:40 am

Recently, Dale Kasler wrote an article that celebrated the rise of FHA loans in the mortgage industry. He noted the rise in FHA loan applications and new initiatives by HUD. The Federal Housing Administration’s loan program,  were nearly forgotten during the years of soaring real estate prices and various no-money-down mortgages, is fueling new lending throughout the Sacramento region.  Mortgage brokers said Monday the FHA program, in which the federal government’s guarantees make loans more affordable, accounts for the vast majority of their business. That’s become increasingly true as credit markets tighten and conventional mortgage guidelines become more restrictive.

Some experts said the FHA’s guarantees are playing a major role in the fledgling recovery in Sacramento’s real estate market.  “This is the best game in town,” said Michael McGee of Winchester McGee Real Estate & Loans in Rancho Cordova. “It’s the only game in town, really.  Jon Kaempfer, a loan consultant with Vitek Mortgage Group in Sacramento, said he does 60 % to 70 % of his loans through the FHA mortgage refinance loan program, “like I did in the old days.”

With conventional lenders demanding down payments of 5 % or 10 %, the 3 % down payment required by FHA has become a bargain. That could make the FHA “the new lender that’s going to deal with risky loans,” said Steven Krohn, an economist and analyst with the Real Estate Group Inc., a consulting firm in Sacramento  “They’ve moved in to kind of remove the financing risk from the banks and the investors.”  At the same time, Krohn said, the FHA program is putting confidence back in the market.  “It’s important that the housing market revive itself,” he said.

The FHA mortgage loan program never went away. But during the boom, market dynamics made the program far less relevant. Borrowers could get mortgages without any down payments. And rising home prices put most deals off limits to FHA guarantees, which were capped at $362,790.  Recent reports indicate that California FHA mortgage lenders have not benefitted much from the increased FHA loan limits, because most banks still consider loans above $417,000 as a jumbo loan and the loan to value restrictions are greater. “Everybody was buying $400,000 or $500,000 homes – you couldn’t do an FHA loan,” said Kaempfer, a board member of the California Association of Mortgage Brokers.

 

 

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7 Comments »

  1. I know most brokers do not agree with me, but I believe FHA should expand the down-payment assistance loans. It will stimulate origination and all the bad borrowers already defaulted. Does anyone else agree with my care-free philosophy? – Pete

    Comment by FHA home financing — October 7, 2008 @ 7:05 am

  2. Unfortunately, the subprime mortage loan crisis has hit Main st. FHA just introduced the Help for Homeowners loan product and the FHASecure has helped thousands of borrowers escape the rising costs of adjustable rate mortgages. Keep posting the great articles and lending news!

    Comment by FHA home loans — December 12, 2008 @ 9:55 am

  3. Rates have dropped again. If you are a homeowner struggling with the high costs of an aadjustable rate mortgage, then consider refinancing with FHA loans. We have helped many homeowners with bad credit lock into a fixed rate with FHA mortgage products.

    Comment by FHA loans — December 13, 2008 @ 7:27 pm

  4. 2009 will see some monumental moments with record low mortgage rates, breakthrough foreclosure bailout measures and predatory lending reform. Keep the good posts coming!

    Comment by Real Estate News — December 17, 2008 @ 12:20 am

  5. Advertising can be challenging during Christmas and the holidays. In past years we had held back on mailing campaigns because direct mail can be costly and risky if the drop hits late. However, this year our mortgage lending clients really wanted to target specific audiences and they were willing to take the risk. I am happy to say that we exceeded our goals and the loan modification company and mortgage lender we mailed for had amazing results and that clients increased loan funding significantly. Kelly Media Group is a Direct Mail Marketing Company that enjoy the challenges that our evolving society brings. Thanks for the financing articles that help me get a better perspective of mortgage lending.

    Comment by Jason Cardiff — December 17, 2008 @ 11:48 pm

  6. The advantages of HUD endorsed mortgages, like FHA home purchase loans are the low mortgage rates and the fact that you only need 3% to be used for the down-payment. The conventional lenders want 20% down and FHA may still approve you for home financing, even with bad credit. Thanks for continuing to post helpful articles.

    Comment by Jaime from FHA Home Loan Services — December 19, 2008 @ 3:51 am

  7. Get cash out from the equity you have left with a fixed low rate home equity loan that offers tax deductibility and very low interest rates. Pay off bills or finance the cost of home improvements. Thanks for always keeping us up to speed on the mortgage industry!

    Comment by home equity loans — December 19, 2008 @ 9:41 am

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