A few weeks ago, we talked about Congress, the Bush Administration and the FHA and a bill that was being debated. Perhaps it is time for an update on where the legislation stands.

Congress believes it has the right, and the obligation, to pass laws that would allow and even require that some $300 billion worth of troubled loans would be turned over to the FHA to manage. There is little doubt that there are risks for everyone involved in such a turnover. Nevertheless, as much as people are talking about the risks this would place on consumers, the government and plenty of other people, there has been movement within Congress regarding the process.

The bill passed throughout the House. It is now on the floor of the Senate and being debated. The bill has been expanded to now include some 1.5 million loans; most of these loans are subprime, high-risk home loans.

While the FHA is an outstanding organization and provides a lifeline to those that need it, the debate centers around one fact: should Congress step in and force the FHA to take these substantially risky loans at the taxpayer’s expense. More so, just a few weeks back, FHA announced that last year, the 2007 fiscal year, say a loss of some $4.6 billion dollars. That is the largest and most severe drop the government agency has ever seen. Yet, more risk is in order here through even more loans that are high risk?

As with everything in Congress, the Senate did make some changes to the bill. They added what is being called a modernization. This will provide the FHA with the ability to lower the amount of a required down payment by the potential homeowner while still allowing the agency to nearly double the loan limits in place. The problem I see here is that this may put even more risk on the heads of taxpayers. Tens of billions of dollars worth of risky loans could be on the taxpayer’s head. Is that the right route to take?

There is a lot of speculation as to why the FHA struggled last year. Yet, looking forward, the goal of this agency is to provide a financially sound start for those who need it. In addition to this, you have to wonder if this will help to pull the country out of its housing situation. Can one agency be called on to do so much?

Another worrisome area of the Senate’s proposal is the fact that the FHA will be able to take loans from private banks that are funding them. The problem is that these are the highest risk subprime loans, which puts additional risk on the agency.

According to Brian Montgomery who is the current FHA commissioner, the bill would strap the agency considerably. After talking about the losses from last year, he noted that the FHA would be further in the red should the bill pass Congress and be signed into law. In fact, it is not just speculation. Many of the lenders who have funded these high-risk loans are now saying that they will take the “bailout” and hand over the loans to the FHA to manage.

Reports show that people are looking for answers to their home loan needs. For many people, FHA loans are the best type of loan to fund your home, and I highly recommend that anyone that may be struggling or otherwise looking for a good deal to contact FHA lenders to find out what solutions are available to them. There is no doubt this agency has every ability to help many.

The housing industry is under an enormous strain, without a doubt. However, news is that existing home sales are up. Some real estate agents are contributing the growth in home sales to be because many home buyers are finally getting off the fence about making their investment. Since many homes are now at the lowest rates they have been in four years, the investment opportunities are simply too good to pass up, and buyers realize this.

Resale of homes and condos in the United States market have risen by 2 percent. This is a seasonally adjusted rate that takes into consideration the movement from April to May. In May, some 4.99 million homes were bought while in April, 4.89 million homes were purchased. The good news is that this is the highest rate increase since February and may signal a lessening of the worries many home buyers have faced over the last months.

Look farther back and you can see where the real numbers are. In the last year, figures are still markedly lower with a drop of 15.9 percent. Look even farther back, to the peak home sales of 2005, and the drop is much more considerable at 31 percent.

Of the homes selling, about a third of the total sales are distressed sales. These include homes that are in foreclosure (or have been foreclosed on) as well as short sales done to keep foreclosures from happening.

Inventory numbers are still high, but did fall 1.4 percent in this period. There is still a near 11-month supply on the market. Home sales have dropped in value, though. They are down 6.3 percent over 2007 to $208,600, which is a median price. The largest growth was seen in the Midwest while the Northeast rose nearly the same about. The South saw the smallest increase of all areas.

New home sales have not fared well, which has put a large strain on the economy as home builders struggle to find individuals willing to buy. The Commerce Department announced on June 26th that new home sales fell by 2.5 percent. The annual rate (seasonally adjusted) has fallen to 512,000.

As this shows, home buyers should be ready to get into the market. With home prices at historically lower numbers and interest rates quite loan, there has not been a better time in recent history to get into the market. Since many economists feel that by the end of the year the housing market will turn upward significantly, those considering purchases should make their move sooner rather than later.

To get the lowest rates and to have the most secure loans, homeowners should seek out the opportunities to buy into these markets offered by FHA loans.

You are an individual who would like to get into their first home. You are worried, even scared to get started due to the number of risky loans out there. The headlines tell the story themselves.

“Subprime Smack Down”
“Foreclosures Increase Homelessness”
“Countrywide Accused of Predatory Loans and Misleading Ads”

And, these are the nicest you have seen. The media has made the housing market even worse than it is. The fact is, for someone with decent credit, there are some of the best opportunities available, especially those who qualify for FHA loans.

Look at the facts.

#1. Home inventory numbers are at the highest they have been in recent memory, which means there are plenty of homes to select from if you are ready to get into them. If you have been on the fence, now is the time to jump off.

#2. Interest rates are at record lows. The Fed recently announced that they would keep interest rates at this historically low point for this quarter (2 percent prime lending is not very bad at all.) In other words, these home loans are inexpensive.

#3. It is a buyer’s market. There is no doubt about it, cheap homes are out there in record numbers. Housing prices have slowly fallen to levels as low as 31 percent of their record high numbers in 2005. They are not likely to continue to fall much farther, many economists say.

For those considering buying a home, there are aspects to worry about. For example, many home buyers are rightly concerned about the risks of getting into a loan that is not stable, too costly or even worse, working with a lender that may go under. Those are important worries, but an FHA loan may help to put your worries aside.

In record numbers, FHA has been helping home buyers to get into more affordable loans. There is no reason to worry about lending when you have this government-backed loan for your home. Moreover, FHA loans are even more affordable than those that are conventional. They are more readily available too, since you do not have to have a large down payment or a perfect credit score to get into them.

The headlines you see are worrisome for many reasons. In addition, while there are risks with some lenders and with those in subprime loans, there are still opportunities available to homeowners who are looking for new opportunities. If you are considering the purchase of a home, get into it through FHA.

There are many ways to look at the current bill in Congress that would allow FHA to take on some of the most risky loans. While I have not been very positive about this situation, if it does happen, what should the average homeowner expect and what should you do to get help?

First, if you are in a situation and need help, do not wait for this bill to pass. Instead, call on FHA as soon as possible. Find out what solutions they may already have in place to help you out of your worrisome mortgage and into a safer one. Many homeowners who are struggling to make ends meet are seeing that they do not have to lose their homes to foreclosure. Instead, they can take advantage of the programs already in place through FHA to get into a more affordable loan.

Granted, not everyone qualifies right now for this opportunity. Let us say you do not qualify for an FHA loan right now. What do you do should Congress pass this bill?

The first step to take is to talk to your mortgage lender about the options they are giving you. Yes, you hate when they call and the pressure they put you under. One thing is for sure: if this bill goes through, you will need to put some pressure on your mortgage lender to put your loan into consideration for help from FHA.

If you do not get the help you need from your mortgage lender, the next best move for you to make is to contact FHA directly or through another lender offering FHA loans. Many lenders will be more at ease to pass off these loans onto the FHA especially if they are high risk. Therefore, it may be your opportunity to make your move.

There are a few things to avoid.

#1: Do your best to stay in the loan right now, making payments as much as possible. Do not assume that you can just forget about your monthly payment. You should be actively trying to make it.

#2: Do not ignore your current lender. Should the bill pass and your home be in foreclosure to far, you may be out of luck anyway. Therefore, work with your lender. They have more solutions now then they had in the past.

Mortgage help is available to many people currently. If you have not done so yet, find out if an FHA loan can help you. You may be shocked to find out it is just the right opportunity.

Every day I see more homeowners who are worried, terrified really, that their loan is going to cause them to lose their home. OF course, with the latest economic data out, there is no doubt that the risks and worries are there. Jobless numbers are rising. The economy is trying to recovery (retail sales are up, which is always a good sign.) Oil prices are causing everyone to cringe every time you step up to the pump. Yet, still, the largest concern I see is a bad mortgage. If you want to fix your mortgage, what would you do? More importantly, what could you do?

Foreclosure prevention is the term of the day. This method has been designed to help those who are struggling with making their mortgage payments before the home gets to foreclosure. These are troubled loans needing help. The problem is, many loans can be worked out, but many others cannot. Why do some lenders offer solutions while others do not? Let us try to explain here.

First, who are the game players in foreclosure prevention? The mortgage servicer is on one side of the coin. On the other are the borrowers. Then, there are foreclosure prevention counselors in between, serving as the go between. In other words, you do not work directly with your lender to fix your mortgage. Instead, you work with a third party. Unbelievably, your lender does want to fix your loan because it is much more profitable (as well as much less expensive) to have you in that loan even at a lower profit amount, than it is to foreclose on you. That is not to say they will take anything, because they simply will not.

So, why do some get help and others do not? It really comes down to the numbers.

The lender is looking at their numbers and their costs. For example, if you are going to cost the mortgage lender more to stay in your home (by fixing the loan) than foreclosure will cost the lender, then the homeowner is unlikely to get their loan fixed. When foreclosure is less expensive to the mortgage provider, they are likely to go that route. In addition, they do have the right to do so.

On the other hand, the foreclosure process is anything but inexpensive. According to Center for Responsible Lending, the foreclosure process will cost the lender about $50,000.

What Happens In Foreclosure Prevention?

So, how do you know if you will qualify? First things first, the bank wants to know, directly, what the problem is. They will likely request a detailed explanation of your income and expenses, down to the food you buy and the credit cards you have. You will likely need to provide paycheck stubs as proof of income and bank records, too. Often, it is in these expenses that negotiations happen.

For example, let us say you have a nice Lexus in the garage and are paying a hefty $500 a month on it. The lender may require that you get out of the loan before they will work with you on foreclosure prevention.

Then, the mortgage lender will begin to figure out just what you can afford in payments. Let’s say that you bring home $4000 a month and have $2200 in expenses and you put aside $200 a month in savings. The lender will then work with you to get your housing payment at $1600 or around that much.

Now, remember, as a homeowner your lender is not going to work with you directly on this. You will need to contact third party mortgage prevention specialists.

It is also likely that you can find some help available to you through FHA loan specialists who can help you get into a new loan altogether. Whatever you do, do not sit on a bad loan.

In a recent story reported by the Tri City Herald out of Washington, FHA loans are set to move forward at a much faster rate. In their report issued on June 25th, there is evidence that the number of home buyers looking for secure loans through FHA is increasing. This is the same sentiment happening in many cities around the country.

Lenders offering conventional loans are making it more difficult every day for the first time home buyer to get into a home. Those without high credit scores or a significant down payment are finding it difficult, if not impossible to get into the American Dream scenario of homeownership. This has crippled many opportunities for potential home buyers across the country. If you cannot prove yourself through a first time home loan, how will you ever get into a home at all?

FHA has the goal of helping those without significant histories of credit worthiness. They provide insurance to help mortgage lenders accept the less than ideal credit score or the low down payment. First time home buyers are turning in record number to the FHA loans because they are the only opportunities available to them.

Yet, is using an FHA loan a bad thing? Even those who would otherwise be able to get into a conventional loan should be thinking about the benefits of FHA. This includes a lower interest rate, more security, lower down payments as well as the simple fact that lenders are willing to loan with FHA insurance backing the loan.

In the report issued by the Tri City Herald, it shows this through the numbers. From October of 2007 through May of 2008, some 722 FHA backed loans were put in place. That is more than a twelve month space from October of 2006 through September of 2007 (that time period say just 683 loans in a significantly longer period of time.)

The same scenario is playing out in many areas of the country. The fact is, first time home buyers often need this type of loan to get started on the home ownership path. Yet, many other home buyers that would qualify for conventional loans are still seeking out FHA loans because there is less risk and worry.

Are you ready to move forward with a home purchase? If so, find out if you qualify for FHA loans. It could mean the difference between getting into a home or not, but more than likely it means more security.

The number of FHA loan applications see through FHA loan specialists is growing…surprisingly. In fact, for some bankers, that is all they are seeing happen. Why are so many people looking into these loans? There are several reasons and it all comes down to the overwhelming benefits of FHA loans. The number of FHA loans secured in the first quarter of 20008 when up 126 percent compared to the same quarter last year. Make no mistake, these loans are only a fraction of the market share, but they are growing faster than any other type of loans out there.

Reduced Restrictions Push Numbers Up

One of the key benefits of FHA loans is the reduced down payment. This, along with the lessened credit score requirements seem to be helping. That is what people want to know. They can pay less for a loan with lower interest rates because FHA loans offer lower interest rates to borrowers with a bit more risk. They also do not have to have a large down payment, which has harmed many people in the past.

In addition to this, the government approved an increase in the amount of money that can be borrowed through FHA loans, which has drastically helped many of the country’s more lucrative investors in locations such as California where a home is double what it is elsewhere in the country. The increase moved the maximum allowed to be financed through FHA up to $729,750, nearly doubling it.

If you are currently struggling with your loan, FHA refinancing is also quite lucrative since many of the same benefits are in place. For those homeowners who took advantage of the lower adjustable rate loans a few years back and are now facing adjustments in those rates, refinancing into an FHA loan can help them stay in their home.

It is helping many people. Consider this. As reported by Chron.com, Wells Fargo spent some time working to train real estate agents on the benefits of FHA loans. To do this, they welcomed agents to movie theaters around the country, where they broadcast live training sessions. Their goal: teach agents about FHA loans in the hopes that these agents would in turn promote the idea to their interested clients. In doing so, the company saw an increase of 342 percent over 2007 in volume of loans serviced.

It’s Effects On You

FHA is an option for many borrowers. If you find yourself facing lenders who turn you away because your debts are higher than others are or because your credit score isn’t as high as it could be, these loans can work for you.

I highly advise anyone that is considering applying for a new home loan or are considering refinancing a current loan to look into FHA loans. They are not for everyone, of course, but they do offer benefits where other loans are often holding you back.

Consider the current real estate market. You have the goal of owning property. You have the goal of buying a home. You do not have a credit score that is stellar, but you have a job and are making decent money. You do not have a down payment. Although you could do very well in a home loan, some lenders will tell you no shutting the door on your dream home while just a year ago they would have been welcoming you in. That is harsh, but it is today’s reality. If this happens to you, FHA loans are more flexible and ideal for some borrowers. Do not sign on the dotted line until you have considered all options.

As for the FHA numbers being up, that is a sign that people need this organization to keep them buying homes.

Over at the Reverse Mortgage Guide, Peter Miller points out a part of the Housing Rescue Bill that has been largely overlooked: a limit increase and fee reduction on reverse mortgages. Miller points out the changes:

Reverse mortgage borrowers will benefit from a higher loan cap ($625,000)and also by a reduction in allowable lender fees from roughly 2 percent to 1.5 percent. HUD insurance charges remain unchanged.

With so many issues being addressed in this legislation, it certainly is easy for important changes to be overlooked by the general public. Hopefully, this bill hasn’t tackled too many issues…

Thanks to Peter for pointing this out!

The House passed the Housing Rescue Bill, which will affect many aspects of the housing market. So just how exactly does it affect FHA loans? In CNNMoney.com’s account of the bill, the effects on FHA are described as follows:

Increase the Federal Housing Administration’s role. The FHA could insure up to $300 billion in new 30-year fixed rate mortgages for at-risk borrowers in owner-occupied homes if lenders agree to write down loan balances to 90% of the homes’ current appraised value.

Lenders would also agree to pay upfront fees to the FHA equal to 3% of a home’s appraised value. Borrowers must agree to pay an annual premium to the FHA equal to 1.5% of their new loan balance. They must also agree to share with the government any profit they realize from selling or refinancing.

The cost of the new FHA program - which would begin on Oct. 1 and be in place for just a few years - would be funded by fees from Fannie and Freddie.

While the bill authorizes the FHA to insure up to $300 billion in loans, the CBO estimates that the agency is only likely to insure up to $68 billion and help keep roughly 325,000 people in their homes. Those estimates were based on the CBO’s assessment of who is likely to qualify under the program and who is likely to default and lose their home anyway despite being in the program.

Steve Preston, secretary of the Department of Housing and Urban Development, which oversees FHA, called the bill “a mixed bag.” He said in a statement that the measure “ties our hands” by making it impossible for FHA to charge higher rates to riskier borrowers. The bill calls for a 12-month moratorium on so-called risk-based pricing for FHA loans.

“Now, FHA will be required to increase prices on all customers or eliminate its refinancing program for subprime borrowers at a time when they need it the most,” Preston said.

As you can see, the folks over at HUD aren’t exactly thrilled with the bill. This should certainly raise eyebrows.If the people who know FHA best aren’t behind the bill, its ability to truly serve Americans is doubtful.

Another CNNMoney.com article, “How the Housing Bill Can Rescue You,” specifically outlines who can be helped by FHA and what they will need to do to be serviced. Here is a snippet of the eligibility requirements:

Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 31% of their gross monthly income on mortgage debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

This program will only be in effect for the next couple years, and hopefully it will do more help to Americans than harm to FHA. There certainly is the potential…

It was reported today that President Bush has reversed his pledge to veto the Housing Bill. According to the New York Times, Secretary of the Treasury Henry Paulson is to credit for Bush’s change of heart:

But Mr. Bush set aside those objections on the advice of the Treasury secretary, Henry M. Paulson Jr., who told him that the overall package was necessary to help stabilize the housing and credit markets, according to the White House press secretary, Dana Perino, who announced the switch Wednesday morning. Ms. Perino said the gravity of the crisis, coupled with Congress’ plans to recess next week, was the reason for the reversal.

There is still a possibility that the bill will be held up in the Senate, but a huge obstacle has just been overcome.