Although loans guaranteed by the Federal Housing Administration can be the best way to buy a home with a low down payment, its lending guidelines are suddenly very strict.

The Neighborhood Watch guidelines mean that the average credit score for a loan (more…)

Government pulls back on jumbo mortgages:  It appears certain that come October, HUD will stop offering backstops for FHA loans of more than $625,000. The new size would occur save for a decision to extend the temporary loan limit rules that Congress expanded in 2008. Fannie and Freddie, in turn, will cease to buy loans above the new loan limit amount.

This is bad news for anyone that owns a home worth more than $729,750 in high-cost (more…)

While a shutdown would mean that the Federal Housing Administration will suspend new guarantees of mortgages, it probably won’t change things very much.

FHA guaranteed loans are very important right now. FHA and VA constituted approximately one-third of new mortgages up in 2010, and most of that was from FHA. FHA raised its premiums and this dampened the appetite for those loans. (more…)

While a lot has been said about how banks are moving risk off their balance sheets and on to the Federal Housing Adminisitration, those critiques are really too broad. Yes, banks are relying on the FHA loan program, but others are not.

The FHA charges an upfront premium to borrowers when it makes a loan. The fee is currently 1 percent. There are  (more…)

More home buyers are seeking mortgage loans backed by FHA guarantees.

I have been looking at lending patterns in my own community – Durham, North Carolina – and the 2009 numbers paint an interesting picture that suggests a dual marketplace. One group – white and Asian borrowers – continues to eschew the FHA program in favor of conventional loans. Another, made up almost entirely of African-American borrowers, is turning to the FHA program. What is more interesting is the extent to which the sudden switch is unaffected by borrower income. Even well-off African-Americans are flocking to FHA.

I ran a chi-square that sorted borrowers by their race or ethnicity and by their incomes. Incomes were separated (more…)