FHA VA Blog

Housing Counseling Grants Help Fight Foreclosure

Neighbor to Neighbor, a Fort Collins/Loveland non-profit that provides free counseling services to Larimer County residents was recently awarded a housing counseling grant from the U.S. Department of Housing and UrbanDevelopment (HUD). HUD's Regional Director John Carson presented a check for $46,743 to Neighbor to Neighbor Board President Laurel Buchanan and Executive Director Wendie Robinson. The grant helps Neighbor to Neighbor continue to provide housing counseling services for homebuyers, homeowners, renters and seniors that are considering a reverse mortgage. Mr. Carson explained, "housing counselors not only educate people prior to buying a home, but they also help homeowners that might get in financial trouble keep their homes and avoid foreclosure. FHA's new loan product FHASecure is designed to help homeowners that have adjustable rate loans and may be facing foreclosure to refinance into fixed rate mortgage loans."

Alan Batchen spoke about his experiences and how a Neighbor to Neighbor counselor helped him successfully avoid foreclosure. Mr. Batchen faced a difficult decision - pay for vital prescriptions for his wife, or pay the mortgage. Health insurance didn't cover enough of their medical expenses, and their adjustable rate mortgage payment increased making their house payment unaffordable. "When I got into trouble, I didn't know where to turn; I didn't know what more I could do, but Neighbor to Neighbor came through and helped me. I was lost and overwhelmed by the process. Without their help, I would have lost my home," Mr. Batchen said.

"It's important in these situations to find someone who can help you navigate the complicated foreclosure process and find someone who understands. Neighbor to Neighbor had the knowledge and the experience to help me," said Mr. Batchen.

"Consumers need to learn about homebuying and develop their decision-making skills, especially before purchasing a home or refinancing an existing mortgage," said Wendie Robinson, Executive Director of Neighbor to Neighbor. "Without access to quality information and guidance, many Larimer County residents may miss opportunities to get the most out of what is likely to be the biggest investment of their lives, or worse, fall into mortgage traps that eventually lead to foreclosure and financial ruin," Ms. Robinson said.

Neighbor to Neighbor is a HUD-approved Housing Counseling Agency and a member of the national NeighborWorks® network, the nation's largest force of certified homeownership educators who have counseled more than half a million homebuyers.

Housing Counselors in Colorado

The FHA reform bill did not pass the Senate last week.  The Senate is out of session until the 3rd of December delaying further action until then.  There is much optimism that the bill will pass before the end of the year, expectations are of a final bill by both Houses of Congress in Mid December.

The Senate Banking Comittee accepted a 12 month moratorium on FHA's risk-based premium proposal

What happened? 

The Senate leadership had hoped t o pass the bill through the "hotline" process which is a streamlined process, however some Senators were unwilling to lift their "hold" on the legislation.  The "hotline" process requires unanimous consent from all Senators to allow for a vote on the bill.

The good news is that most of the Senators' concerns were primarily procedural and the "holds" could be lifted at any time.

It is not expected that there will be any significant changes to the bill.  Below are key elements of the bill and the current likelihood of implementation.

*Downpayment/Cash Investment - allowing for 100% LTV purchase with a 1.5% cash investment.  Right now this is considered very likely with a small possibility to increase the cash investment to 2.0%.

*Mortgage limit ("floor") raised from 48% to 65% of GSE limit $271,050 - almost guaranteed.

*Mortgage limit for "high cost" areas increase to $417,000 - almost guaranteed and could go as high as $500,000.

Reverse Mortgages - remove cap on volume, raise maximum loan limit to $417,000 and allow reverse mortgages to be used for home purchases - almost guaranteed.

They will also need to work out the differences between the House and Senate provisions on seller funded downpayment assistance programs.  We have not heard how that will work out yet.

Right now FHA loans are helping a lot of people purchase homes and refinance into better mortgages - the rates are great - even when you require a manual underwrite or can't get a scorecard accept.

Call us with questions,

Theresa & Ray

This article by Jesse Holland provides a great update of the current situation... 

House bill would toughen lending rules
By: JESSE J. HOLLAND - Associated Press

WASHINGTON ---- With home foreclosures skyrocketing, the House on Thursday voted to crack down on mortgage lenders by forcing them to get licenses, making them responsible for discovering whether borrowers can really repay and fining them for steering people toward risky subprime loans.

The measures are designed to keep more people from sinking into the current mortgage crisis, where prospective homeowners with shaky credit got mortgages with low interest rates only to see the rates rise and bring monthly mortgages up to prices they cannot afford.

More than 2 million adjustable-rate mortgages are scheduled to reset by the end of 2008.

Many American homeowners are expected to go spiraling into debt, with the number of homes involved in foreclosure proceedings nationwide almost doubling in the third quarter of this year when compared with 2006, according to RealtyTrac Inc.

"What we have today is a bill that cannot undo what happened, but makes it much less likely it will happen in the future," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

But Republicans and the White House warned that congressional meddling with mortgage markets could make things even worse. Many Republicans argued that the bill would make it harder for borrowers to refinance loans due to reset at higher interest rates, and make it almost impossible for poor people to get loans to buy a house.

"Congress does two things very well: One is nothing, and two is overreact," said Rep. Tom Price, R-Ga. "While we have had a period here where some credit, some loans were unwisely given, but allowing individuals, allowing Americans to purchase homes and realize their American dream is a good thing."

But Democrats said the subprime market needs to change to ensure that people get loans that are beneficial to them, not just good for the bottom line of some corporation. "This bill is not designed to harm the subprime market, it's designed to reform and correct it and make it work properly," said Rep. Keith Ellison, D-Minn.

The White House did not threaten to veto the bill. "But the administration has concerns with the bill as drafted because it includes provisions that unduly restrict access to credit for potential home buyers and reduce refinancing opportunities for current homeowners," the administration said in a statement.

The bill, H.R. 3915, passed 291-127. It now goes to the Senate, where a similar bill has been stalled for weeks.

Included in the legislation are provisions that would:

- Ban lenders from making loans that borrowers don't have the ability to repay;

- Prohibit lenders from steering homeowners into refinanced mortgages that don't provide any benefit and create fines of triple the broker fee and costs;

- Make Wall Street banks that package mortgage securities into investments liable for violations of lending laws;

- Prohibit excessive fees for payoff information or late payments, the financing of points and fees and practices that increase the risk of foreclosure such as balloon payments and encouraging borrowers to default; and

- Create a nationwide licensing system for mortgage brokers and bank loan officers called the Nationwide Mortgage Licensing System and Registry.

Democrats and Republicans agreed that the final product pleased no one.

But "we need not let the perfect get in the way of the good," said Rep. Spencer Bachus, R-Ala. Rep. Mel Watt, D-N.C., added, "Maybe the best tribute to all of us is that we have a bill that no one is completely comfortable with."

Republicans were particular perturbed with the idea that lenders are responsible for knowing whether borrowers can actually pay back their loans. "This kind of murky language would invite litigation from every borrower who misses a payment," said Rep. Ed Royce, R-Calif.

Also, the House has provided $200 million for foreclosure prevention counseling in the Transportation, Housing and Urban Development Appropriations conference report. The Senate must now approve the conference report.

The money will be used by nonprofit foreclosure prevention programs to counsel those who may lose their homes because of risky subprime loans.

HUD has some great advice that we though we'd share - as always, you can call or e-mail us with your questions.  We are here to help!

Theresa & Ray

HUD TIPS FOR AVOIDING FORECLOSURE
Information aimed at helping more homeowners stay in their home

WASHINGTON - Today, the U.S. Department of Housing and Urban Development (HUD) released its top 10 tips for homeowners who are facing foreclosure.

"These guidelines will assist homeowners who are struggling to pay their mortgage and could be threatened with foreclosure," said HUD Secretary Alphonso Jackson. "We want to encourage homeowners to take action and use every resource available so that they can get control of their finances and stay in their home."

If you are unable to make your mortgage payment:

1. Don't ignore the problem.

The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.

Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

5. Understand foreclosure prevention options.

Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at www.fha.gov.

6. Contact a non-profit housing counselor.

The U.S. Department of Housing and Urban Development funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance.

7. Prioritize your spending.

After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

8. Use your assets.

Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

9. Avoid foreclosure prevention companies.

Many for-profit companies will contact you promising to negotiate a loan work out with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide for free if you contact them. You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead.

10. Don't lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a HUD approved housing counselor or trusted real estate professional.

To find out more about HUD-approved housing counseling agencies and their services, please visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call toll free (800) 569-4287 on weekdays between 9:00 a.m. and 5:00 p.m. Eastern Standard Time (6:00 a.m. to 2:00 p.m. Pacific Time). The same number can give you an automated referral to the three housing counseling agencies located closest to you.