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President Signs Bill Locking Out 40% of FHA Loan Candidates, Further Slowing Economy

To add insult to injury to the dwindling middle class of America, this week the President signed H.R. 3221, Housing and Economic Recovery Act of 2008, into law. This bill contains a provision which forbids FHA from insuring mortgages in which the borrower’s down payment comes from a private down payment assistance provider, beginning October 1, 2008.

Many are concerned that Congress has chosen not to address the need for DPA in this bill, even though HUD estimates that almost 40% of all down payment funds comes from DPA sources. The elimination of a large segment of the housing market such as that will have devastating results. It also means that more than 300,000 working class families will be locked out of homeownership in the next year alone. DPA has the overwhelming support of Congressional Black and Hispanic Caucus Members, Mortgage Bankers Association, U.S. Conference of Mayors, National Association of Home Builders, National Association of Counties, and many, many others.

The bill which is hailed as housing aid helps only a small "needle in a hay stack" few, yet absolutely knocks out 40% of FHA candidates from purchasing homes a further blow to the already staggering economy

7/30/08

Re: Connie Mick

Cornelius NC

Two other mortgage companies could NOT get this done.

Mara went out of her way to make sure all my needs were met so my closing could take place as planned. She went to bat for me in so many ways. I appreciate all she did for me!!!

Congress Signs Bill To Slow The Economy Even Further

Is DPA Gone For Good?

The Senate & House appear to have reached a compromise on a large housing bill that includes language eliminating downpayment assistance (DPA).

The Housing & Economic Recovery Act of 2008 (H.R. 3221) is rumored to be on the agenda for discussion and possibly a vote this week. Section 2113(c) of H.R. 3221 contains a provision that would eliminate downpayment assistance. If this bill passes and is signed into law DPA will no longer be available. Although President Bush is threatening to veto the bill, many believe he will sign it if it gets to his desk.

40% of FHA loans GONE

The consequences will be devastating! By FHA's own estimates, DPA comprises nearly 40% of FHA's volume. This means more than 300,000 working class families will be locked out of homeownership in the next year alone. Communities across America will take the brunt of the $50 billion in lost real estate sales, not to mention the indirect impact on the real estate, mortgage and building sectors that will be forced to shed tens of thousands of jobs due to this dangerous legislation.

The current Bill will have little if any affest on refinancing or saving anyone in the US. As a mortgage  broker we have done exactly 0 of the current "FHA Secure Program" that was supposed to save so many families has such narrow requirements that we have yet to find someone who qualifies. This new program is basically the same and requires that a lender "Want" to write down or off the difference between what the home is worth and what is owed. Gee I wonder if the will "want" to do that???

So ultimately this boils down to more and more laws from people who don't understand what they are doing.

I propose a concensus from the industry on what should be done. Leaving DPA alone is a good start as this will only cause an even slower economy.

I guess people in the upper middle class and top 3% wouldn't know about DPA like we do here in the trenches.

Read the next blog for further suggestions and please give your opinion as well. the more minds on this matter from people actually in the industry can only help. 

Congress Signs Bill To Slow The Economy Even Further

Housing Bill an Immediate Threat to Downpayment Assistance!

The Senate & House appear to have reached a compromise on a large housing bill that includes language eliminating downpayment assistance (DPA).

The Housing & Economic Recovery Act of 2008 (H.R. 3221) is rumored to be on the agenda for discussion and possibly a vote this week. Section 2113(c) of H.R. 3221 contains a provision that would eliminate downpayment assistance. If this bill passes and is signed into law DPA will no longer be available. Although President Bush is threatening to veto the bill, many believe he will sign it if it gets to his desk.

The consequences will be devastating! By FHA's own estimates, DPA comprises nearly 40% of FHA's volume. This means more than 300,000 working class families will be locked out of homeownership in the next year alone. Communities across America will take the brunt of the $50 billion in lost real estate sales, not to mention the indirect impact on the real estate, mortgage and building sectors that will be forced to shed tens of thousands of jobs due to this dangerous legislation.

It is the oipinion of this company that the only way to cause true liquidity in the economic markets is to adjust FHA from guaranteeing 20% to guaranteeing 30% of an FHA mortgage. The effect of this action will be to calm the markets over risk and make lenders who sell FHA loan products to feel more comfortable to continue doing so. Right now lenders are overlaying their own guidelines over the top of FHA mortgage programs and thus are creating high bred FHA programs.

After HUD was to makes the changes to guaranteeing 30%, HUD would need to add teeth to current standards for lenders approved to sell their FHA guaranteed mortgage products, making it punishable by losing the right to sell FHA if they do not follow "True FHA Guidelines".  The added risk can be offset by the upfront MIP that FHA charges each client using risk based pricing 

7/14/08

Re: Charles Simmons

1) Q Was the closing performed professionally and efficiently? Yes

2) Q Were you kept informed during the loan application process?  Yes

3) How would you rate the staff? Excellent, friendly & Helpful

4) Would you recommend our company to other Yes

5) Did you receive the loan product that was recommended to you? Yes

7/22/08

Re: Anabel's handling of the Golgamez' family home purchase:

 Anabel Was Very Helpful and worked very hard to make my loan happen

Thanks A LOT!!!!

G Galgamez

Charlotte NC

Angie is very nice and polite. I have asked her questions over and over and she always answers any questions I had. She always kept me informed on everything. I would recomend her to anyone. She is very sweet and very professional.

Joseph Boger

Cooleemee NC

Below are a few comments that some of our clients

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6/19/08

Hi John,

I did not get chance to thank Angie myself

for Latrece Huell that you and your company

did a great job on her loan. She is now happy

with the new home and also she is very exited!

Thanks a lot!

Of course your service will be recommended

to all my future clients.

Best Regards,

GK

Gospodin Kostov

Realtor®

Wilkinson Real Estate

336-340-7881 (Cell)
_______________________________________________

May 29th 2008

Re: Natasha Everidge

Your Company was extremely helpful especially Debbie

& Mara. We could not have possibly worked with anyone

more helpful than Mara

Natasha Everidge

Harmony NC

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April 23rd 2008

Re: Damien Clinton

Angela Guy went far beyond the call of duty to ensure

that my loan experience was a pleasant one. If I ever

do this again, I wouldn't choose anyone else.

Damien Clinton

Mocksville NC

_________________________________________

Thanks for all your hard work!! We knew you would

come through and we are so glad you did!

Richard & Jennifer Thompson

Mocksville NC

_________________________________________

We cannot thank you enough for all your efforts &

hard work. You & John literally made our dreams

come true. I know you went above & beyond to

work this out for us and we so greatly appreciate

you both. It is so nice to have two bathrooms and t

he kids love having their own rooms. We wish you

and your family a wonderful holiday season & God

Bless

Trent & April Shore

Booneville NC

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To John Shaw & Colleagues,

It's people like you that makes life so great.

Thnks for all you guys did for me and a special

thanks to John for being a wonderful friend

Thank

Malebogo Tyler

Winston Salem NC

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John,

We just wanted to thank you for being such a great

Broker. You and your crew have done an excellant

job

Jason & I know what we want to do in life & now

it all finally makes sense in real estate.

Thank you for all your great information and advice.

We now have a goal to work towards and I know

we will be successful.

David & Chrstinan Silvers

Winston Salem NC

Re: A solution to Housing Mortgage Crisis

I have been following the housing/mortgage crisis as most have. I have been in the mortgage business for more years than I care to count and have never seen things so bad. The so called FHA fixes are not really helping anyone. You see since the industry has tightened up lenders who are doing FHA loans are NOT following FHA guidelines. For instance, there is not supposed to be a minimum score for FHA loans, yet almost to a man lenders are imposing their own guidelines that over lay what FHA guidelines call for. We understand why they are doing these things which is to offset the risk of the loan. However I thought that is what FHA was supposed to provide. The solution to national liquidity will be returning to TRUE FHA lending. We can get to this point by doing two things

1) Have FHA guarantee 30% of the Mortgage instead of 20% as it is now. This will get lenders into more of a comfort zone and allow underwriters to be more comfortable signing off on borrowers that actually qualify

2) Make lenders approved for FHA FOLLOW FHA GUIDELINES. Right now they are making up their own guidelines and attaching them to FHA loans. Make it mandatory that if they are to continue to lend with FHA guarantees that they must follow the spirit of the guidelines of the FHA loan

By doing both you free up money TODAY and make lenders more comfortable in covering their risks