The mortgage industry is under construction. Actually, it’s more like a restoration project, and as with any project of that kind, the architect takes away the broken or outdated portions of the structure, then improves the classic elements that make the whole thing worth saving.
Over the last year we have seen many changes mostly taking away those pieces that were compromising the structure of the industry. I think we are now nearing the end of the demolition phase of the rebuilding project.
As the debris is cleared the granite cornerstone of the industry has been revealed – the FHA. The FHA loan has remained largely unchanged. Through the madness that pervaded the industry, this government-sponsored loan has emerged, once again, as the “go to” program for borrowers with low down payments for the first time homebuyers for refinancing homeowners with credit challenges for seniors who are cash poor and equity rich, and buyers willing to start out with a fixer-upper.
The Federal Housing Administration was created 70-plus years ago to meet the needs of a segment of the population that was underserved by the conventional lending community. Backed by the federal government and self-insured, the FHA has made homeownership a reality for some 34 million families since its inception.
FHA’s most popular program, the 203b, serves most homebuyers with low money down and down payment assistance grants acceptable. The FHA Secure program was developed to help those homeowners who are struggling with their payments and in danger of foreclosure. The FHA HECM (Home Equity Conversion Mortgage) was designed to help seniors, 62 years of age or older, convert the pent-up equity in their homes into a beneficial, non-taxable income stream to help in their retirement years.
Last but not least, the 203k program is FHA’s rehab project. There are two versions of of this program. The “mini k: helps homebuyers with repairs to the property between $5,000 and $35,000 in value. The full “k” program helps those with repairs in excess of $35,000.
The mortgage industry will always be a work in progress as our leaders seek to accommodate the needs of a changing population and a changing economy. But it’s comforting to know our government continues to provide a wide range pf mortgage products designed to promote and retain homeownership all across America. We couldn’t ask for a stronger cornerstone upon which to construct the 21st century mortgage industry.
by Debbie Campbell, Senior VP, Conway Financial