| The FHA was established to help out those in need of | | | | The sub-prime market helped out many individuals |
| housing in the year of 1934. Since its inception it has | | | | throughout the years and gave loans to individuals who |
| managed to help out millions of home purchasers | | | | otherwise could not qualify for a loan any other way. |
| tallying up to 34 million homes. | | | | The fact that foreclosure rates are up during the |
| Since 2000, the FHA loan program has fallen out of | | | | boom era of sub-prime lending is not the fault of the |
| favor with many Americans due to certain | | | | sub-prime industry itself. Foreclosure rates on |
| qualifications and loan limits thus driving up the | | | | sub-prime loans are actually not as high as many are |
| sub-prime loan market. The FHA has recognized that | | | | reporting. It is reported that only fourteen percent of all |
| the current sub-prime market has made the | | | | home loans are sub-prime and only thirteen percent of |
| foreclosure rate in America rise and is now prepared | | | | those are delinquent. |
| to make the necessary changes fight this sudden rise | | | | This does not mean that the sub-prime market can't |
| in foreclosures. | | | | be helped out by the FHA. With an estimated 2.2 million |
| In 2006, the FHA gave out advice and guidance to | | | | sub-prime borrowers set to lose their homes or will |
| close to 1.6 million households. This advice included | | | | lose their home in the next several years gives the |
| information regarding foreclosure procedure, | | | | FHA reason to step in. Sub-prime interest rates have |
| refinancing their current loan into a FHA loan, and | | | | been known to be as high as ten percent, but with a |
| working out payment plans to avoid foreclosure. | | | | FHA refinance these individuals could lock in a much |
| The fiscal year of 2007 will see the FHA program | | | | more cost effective loan. |
| receive $41.58 million to help out the thousands of | | | | Refinancing into a FHA refinance on a $200,000 loan |
| homeowners facing foreclosure and delinquency with | | | | that an individual could save close to $3,000-$4,000 in |
| advice and counseling. This funding will help with | | | | the first year of a refinance. This option has already |
| counseling services including loss mitigation and other | | | | been saught out by more individuals the first quarter of |
| tools to help these homeowners modify their loans or | | | | this year as opposed to last year by nearly ninty-four |
| even refinance their loan to help out with high interest | | | | percent. The FHA is set to endorse a record number |
| rates. | | | | of loans totaling up to 100,000 for the year. |