About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs
Filed under Government Mortgage Financing Programs News

There was an interesting article over at Forbes recently looking back at the utter failure of the FHAsecure program the Bush administration proudly unveiled around this time last year. We have posted on this failure here and here in the past .

At the time the FHAsecure plan was hailed as a way to help struggling homeowners avoid foreclosure by loosening the standards on getting into FHA loans. The problems with the program were manifold. First, the restrictions were very tight so only a small percentage of hopefuls could apply. For instance, a candidate had to already be 30+ days late on their mortgage to apply but the had to prove that they were late because an ARM reset and not because of other factors. Then the candidate had to find a bank willing to participate and most banks ended shrugging their shoulders and said “nah, no thanks” to the voluntary program. As a result only about 1% of the FHA loans over the last year had anything to do with the FHAsecure program at all.

Yet in recent press release from the White House we got this ugly bit of deception (as quoted from the Forbes article):

In a press release Friday, U.S. Housing and Urban Development Secretary Steve Preston bragged that his agency had helped more than 325,000 American families refinance into affordable mortgages since the housing crisis began.

“One year ago, the Bush Administration proactively provided an affordable safety net to homeowners who wanted to stay in their homes,” said Preston. “Today, with the expansion firmly in place, hundreds of thousands of families are in a better place thanks to FHA [Federal Housing Administration].”

Specifically, Preston cited the success of the FHASecure program intended to help borrowers who missed mortgage payments.

Will the “hope for homeowners” program be any better? It is actually law and was passed via some bi-partisan effort so there is that going for it. But we still have no word from banks on their policies concerning FHA short refinances. They have until October 1st before the program kicks in so with any luck we will see some positive developments on that front in the next 30 days.

Comments (0) Posted by G.R.A. Admin on Monday, September 1st, 2008


You can follow any responses to this entry through the magic of "RSS 2.0" and leave a trackback from your own site.

Post A Comment