Although the media is focused on frozen credit markets, the FHA is clearly open for business and ready to finance home loans. In fact, the FHA’s volume has tripled and the agency is now insuring well over a hundred thousand new loans a month. I’m sure this is a surprise to many people!
In a recent interview Housing and Urban Development Secretary Steve Preston said that FHA, Fannie and Freddie - who account for over 90% of the entire U.S. mortgage market - “have kept liquidity alive” for home buyers - and have virtually unlimited funds for new mortgages. “There is no credit crisis” for individual home buyers who have at least three percent to put down, documentable employment, and at least a moderately good credit record, said Preston.
Business loans and various other types of credit may have been more difficult to obtain in recent weeks, Preston said, but thanks to the government’s backing of the three biggest sources of mortgages, buyers and refinancers of houses have had no unusual problems.
Preston and HUD are playing key roles in the $700 billion financial system bailout plan now getting underway. Preston is one of just five members of the Financial Stability Oversight Board that oversees the entire effort. HUD’s main task in the weeks ahead, he said, will be to either refinance or help work out thousands of delinquent subprime and underwater homes financed by private lenders during the boom years.
The agency’s new “Hope for Homeowners” program, which started October 1, allows it to cut the principal debt, monthly payments and interest rates of delinquent loans through refinancing into fixed-rate FHA mortgages.
Additionally, when looking for funding for a new home in Maine, it is also suggested to consider local banks. Many banks in the area have weathered the current financial crisis better than their national or regional counterparts and have had less bad loans to write off. They are ready to lend to qualified buyers!
Posted by: Michael Sosnowski
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Maine Real Estate
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