Posted on 01/20/2004 6:19:31 AM PST by Salvation
Edited on 04/13/2004 1:41:44 AM PDT by Jim Robinson. [history]
In a bid to boost minority homeownership, President Bush will ask Congress for authority to eliminate the down-payment requirement for Federal Housing Administration loans.
In announcing the plan Monday at a home builders show in Las Vegas, Federal Housing Commissioner John Weicher called the proposal the "most significant FHA initiative in more than a decade." It would lead to 150,000 first-time owners annually, he said.
(Excerpt) Read more at usatoday.com ...
Is that true?
So help me I'd never heard FHA loans were on any kind of a "sliding scale" insofar as the home payment was concerned, FBD.
All I ever thought the FHA did was -- essentially -- "cosign" a loan; thereby, guarenteeing the prospective home buyer's loan.
In fact, someone else posted the specific nuts & bolts of the FHA loan & what it came down to was:
1) No down payment required for qualifing buyers.
2) Points paid by the seller (especially in the case of a VA loan) &...
3) If the buyer defaults on their obligation the FHA will make good on whatever amount of the loan's not satisfied after the foreclosure auction.
But, a FHA loan is like any other loan in that it's a *contract*.
That is it's signed for a specific loan amount, for a specified time & with monthly payments that're agreed to upon signing lasting the life of the loan; which, makes the FHA loan "stable".
FHA loans are unlike (what I know as) a, "bubble loan" which will increase monthly payments according to rising interest rates.
Where'd I go wrong?
"Also, because of the subsidised low payments, very little equity accrues, and if the house is sold, the equity goes to paying the feds back for the subsidy."
huh? >?<
Never heard of such a thing; because, IF the FHA home buyer is in good standing when they sell their home & they sell it at a profit, that profir belongs to the seller & not the FHA.
"After the "homeowner" figures this out, he does one of two things:
A. He refinances with a private lender...and has to come up with that down pmt. anyway, along with payment for the subsidized interest and down pmt."
Which is fine & dandy with me.
Or more likely:
B. He stops making payments, turns into a squatter, and after the final eviction notice, trashes the house and moves on.
In the end; nothing ventured, nothing gained."
Ummmm, I don't think that's so, FBD.
The former buyer may walk, sure's mortgage to the bank responsible for underwriting the loan, y'know; and, that'd be the FHA.
...a.ka the taxpayer.
Exactly. People with no equity in their houses are FAR more likely to walk away from the and the loans when times get rough. And guess who gets left holding the bag? We, the Taxpayer.
This is a stupid plan, just like a lot of ideas coming out of the White House recently. I'm beyond disgusted.
LQ
Thank you kindly, MarieA.
I think you're correct & if I know "FBD", than -- at this instant -- he's doing some *research* before he responds. {g}
"My family has a Rural Housing loan (basically an FHA loan in a rural area through the USDA), and it is a FIXED RATE LOAN. The payment does not change."
Yup, & that FHA loan's written by a local bank where you're living now, right? (~originally, but the bank can always sell your mortgage to someone else)
You & your spouse had to meet certain criteria as set by the FHA, qualifing you for a loan the banks might not have been so inclined to make, for whatever reason(s), otherwise.
The FHA essentially "cosigned" your loan; but, the contract you have has a fixed interest rate & payment plan for either 15 or 30 years, just like anyone else.
The FHA -- or any of these "programs" -- "guarentee" the loan's repayment.
...& that's all they do.
Is that true?
No it's not. I had an FHA loan on my last house. It was locked in like any conventional loan.
1) No down payment required for qualifing buyers.
I made a down payment albeit minimal and paid closing costs.
IF the FHA home buyer is in good standing when they sell their home & they sell it at a profit, that profir belongs to the seller & not the FHA.
Right again!
that'd be the FHA. ...a.ka the taxpayer.
Right again. If you have ever known anyone who has been foreclosed by FHA, I guarantee they are total deadbeats. The FHA does not want to be in the real estate business. If you work with them, they will work with you. I was in pretty desperate straights. However, I had the home up for sale, the property was clean and well tended and no one gave me any grief.
No-no, you were merely mistaken, my friend.
"Oh well, considering many of the posters these days here FR? At least I know I've got plenty of company!"
Whaaaaaaattttttt??
...shush yo' mouth! :o)
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