| If you are not familiar with the Federal Housing | | | | disappeared, property values dropped, and obtaining |
| Administration (FHA) it is time to take a closer look at | | | | mortgages or refinancing became a difficult task. |
| what they do and how they can help mortgage | | | | In 2009 the Federal Housing Administration has made a |
| borrowers. In recent times the FHA has made many | | | | comeback. Their market share of US loans written |
| internal changes to adapt itself to a wider market of | | | | has increased back to 15% for new home purchases. |
| consumers. | | | | Additionally, increased FHA loan limits have |
| Twenty years ago the FHA had roughly 15% of | | | | encouraged borrowers to finance homes of higher |
| mortgages for the home purchase market. Watching | | | | value in hopes of market appreciation. This strategy |
| the FHA prosper during the 1990s was interesting to | | | | was put in place to stabilizing pricing in the housing |
| watch as federal mortgage loans were becoming | | | | market. The FHA has also put in place the following |
| more appealing to a larger segment of the population. | | | | measures to bring faith back to mortgage borrowers: |
| Unfortunately, the FHA they lost a tremendous amount | | | | 1: Increasing loan limits for both single family and |
| of market share to subprime lending institutions offering | | | | multi-family units. |
| low interest rates and flexible loan programs to risky | | | | 2: Flexible down payment requirements. |
| borrowers. Many of these borrowers would have | | | | 3: Acceptance of lower credit scores and forgiveness |
| qualified for FHA programs, however some choose | | | | for previous bankruptcies and foreclosures. |
| adjustable rate mortgages, complicated Option ARM | | | | 4: Reduced or eliminated mortgage insurance. |
| programs, and found themselves in being the victims | | | | 5: Competitive interest rates and lower APRs for fixed |
| of aggressive mortgage brokers and banks. Where | | | | rate loan products. |
| are those subprime lenders today? Many are out of | | | | Consumers are clearly in a power position when |
| business or have been acquired by larger financial | | | | seeking an FHA loan in comparison to private lending |
| institutions due to increasing foreclosures as interest | | | | institutions. As our economy is slowly rising from the |
| rates increased. | | | | mortgage crisis of the past few years, FHA loans are |
| During this time the FHA has remained strong and | | | | becoming the solution for many borrowers today. FHA |
| gaining back market share. During 2006 when the FHA | | | | mortgages will even allow a borrower to "streamline" |
| hit a low point of less than 4% market share for US | | | | refinance a loan when interest rates drop with no |
| mortgage loans, it was obvious that lenient underwriting | | | | appraisal required. FHA mortgages are truly helping |
| and lending regulations is what consumers wanted. As | | | | individuals get back on their feet and put money back |
| a result, borrowers foreclosed on properties, lenders | | | | into real estate again. |