Mortgage Lenders Nationwide

Charlie Lyons elaborates further on the opportunity available for investors to purchase defaulted home mortgages and the roots of the foreclosure crisis.

The housing crisis came as a result of the subprime mortgage meltdown and subsequent banking crisis.  FHA mortgage lenders have been trying to help homeowner recover with FHA loan programs like FHASecure and Hope for Homeowners, but they have not been able to slow the loan delinquencies and sliding home values.

The mortgage industry and the home financing guidelines have a long way to go before the credit markets will be out of trouble, but the road to recovery may be in sight as today we witnessed historic interest rates cut that sparked financial rallies worldwide.  The Dow Jones industrials surged 360 points and broader indexes rose over 5% after the central bank said it will utilize “all available tools” to boost the financial systems of our economy. They also set its target for the interest rate at which banks lend to each other to a range of 0% to 0.25%, the lowest level on record. 

Wall Street reacted positively with markets soaring Tuesday after the Federal Reserve’s historic decision to cut key interest rates again while providing considerable support to offer mortgage relief to the battered economy. According to Mortgage Rate News, the Fed cut led to mortgage lenders across the nation to reduce home mortgage rates as low as 5% for thirty-year fixed rate mortgages for conventional loan types.

The demand for long-term government bonds rose and caused yields to reach historic lows.  The federal government made additional promises to promise to continue to buy bad credit mortgages in an effort to revive the struggling housing markets.  Mortgage Brokers Network executive, Steve Park said, “The government commitment to protect struggling borrowers with new FHA loan program opportunities like, Hope for Homeowners should help restore consumer confidence and mortgage lending.” 

According to Kelly Media Group president, Jason Cardiff, “The fact the lenders are willing to provide loan modifications to homeowners that do not qualify for traditional or FHA refinancing is simply remarkable.”  Cardiff continued, “The interest rate cut by the Fed clearly signals a monumental step by the U.S. to restore trust in our financial systems that should spur more market recovery globally.”  With Obama being nominated early in 2009, we can expect quick action from the President for predatory lending reform, government insured mortgage modifications and significant incentives for lenders who cooperate with short refinance loans, loan work-outs and additional foreclosure prevention measures.

By now most people understand that we have a significant foreclosure crisis evolving. Hundreds of thousands of people each month are receiving a notice of default that is the first step of the foreclosure process.  The latest numbers from HUD are stunning: For the first 15 days of October only 49 homeowners with delinquent conventional loans were able to refinance with FHA home loans. That’s less than one per state.

Consider that the highly-anticipated new FHA loan program, Hope for Homeowners was going to cure the mortgage refinancing problems? HUD announced on October 2^nd, “The Bush Administration today unveiled additional mortgage loan assistance for homeowners who may be at risk of foreclosure. The HOPE for Homeowners Program will refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new FHA loan insured by HUD’s Federal Housing Administration.”

In fact, the Bush Administration was vehemently opposed to the legislation and just days before it passed was threatening to veto the FHA Loan Reform bill which included the Hope for Homeowners package.  But now FHA mortgage reform has become law. The mortgage law has been effective since July but very few borrowers were able to qualify FHA mortgage applicants. But this refinance program just doesn’t work well for delinquent borrowers because they typically have too many late payments.

HUD recently reports that for the first 15 days of October it had 42 home loan applications and they were unable to approve any of these applicants. Even though the FHA home loan program has a history of helping homeowners with bad credit, the Hope for Homeowner loan is providing very little hope for homeowners who are trying to prevent a foreclosure.