12/17/08 Solutions to 100% Financing

Good Morning!

With the fall out of Sub-Prime financing and the deterioration of Alt-A financing there has been a ton of speculation on how people with challenged credit and First Time Home Buyers will be able to qualify for home loans.

Many experts have been referring to FHA and the 100% My Community Products as the solution and the replacement to Alt-A & Sub-Prime lending. There needs to be some changes to FHA to make it available to more borrowers. It has been a long time since the program was updated to fit the current market/economy and it looks like folks in Washington are making moves

We may see the FHA Reform Bill passed prior to the end of the year. If the conference is able to happen next week before holiday recess we could see this implemented ASAP. If not it could be the first couple of weeks of the New Year. Either way, this will open doors for those who were unable to qualify.

I have attached a comparison of the House and Senate versions. The final bill will more then likely be somewhere in-between.

There are some modifications to the original bill that the House passed earlier this fall. The key differences are as follows:

1. FHA loan limits will rise to the current Conforming loan limits of $417,000
2. Minimum down payment will be 1 ½ %.
3. Raises the upfront MI and the MMI premiums.
4. Delays the “risk based pricing” for 12 months.

This is all GREAT news as it helps many more people purchase and refinance out of instable financing. It will also make the FHA Secure program more viable as well.


Final Thought…

The talent of success is nothing more than doing what you can do, well.

~Henry W. Longfellow