FHA Mortgage Insurance Premiums may triple

[HLS]

[quote=Huckleberry][quote=HLS]June 11, 2010
(On a $400K loan the monthly charge would go from $183 to $500)
**[/quote]
HLS, you meant annual charge, not monthly, correct?[/quote]

Annual premium would go from $2200 to $6000.
I cannot imagine that this will pass as proposed. It will not help the artificial market the govt is desperately trying to protect.

FHA is like assigned risk auto insurance, it allows people with very little money and a low credit score to get a mortgage. It may get more expensive. They may be facing huge losses that have not been disclosed yet.

With a decent credit score, Fannie/Freddie are far better loans, but you need a higher credit score to qualify for 5% down. The mortgage insurance premium needs to be factored in as well.

The real fear is that FHA has allowed people to buy homes in the last few years who will default if the market continues to fall and people remain unemployed.

There was no need for FHA loans prior to 2007 when 100% financing, stated income and 2nds were available. They were a tiny part of the financing market. Less than 5% (?) Recently I think that FHA is around 35%.

[andymajumder]

They need to be careful how they reduce more people from relying on FHA loans….but I don’t see how things will not get worse from here.
37% of all loans in SD county in April were FHA loans…I am quite sure in the sub 500K market the share of FHA loans is much larger, these are all people with bought with 3.5% – 5% down. Now even if insurance premiums go up half as much as what you mentioned here (FHA loans are already quite expensive), FHA buyers will shrink considerably which in turn will shrink the no. of buyers significantly (there’s no way suddenly more buyers with high downpayment are going to emerge). This will definitely pull prices lower and thus take a lot of the existing FHA owners who have bought in the past couple of years with 3.5% down underwater and lead to more people walking away and foreclosures….another downward spiral. I would suggest people with 20% downpayment should now just hold tight and watch this play out.

[andymajumder]

They need to be careful how they reduce more people from relying on FHA loans….but I don’t see how things will not get worse from here.
37% of all loans in SD county in April were FHA loans…I am quite sure in the sub 500K market the share of FHA loans is much larger, these are all people with bought with 3.5% – 5% down. Now even if insurance premiums go up half as much as what you mentioned here (FHA loans are already quite expensive), FHA buyers will shrink considerably which in turn will shrink the no. of buyers significantly (there’s no way suddenly more buyers with high downpayment are going to emerge). This will definitely pull prices lower and thus take a lot of the existing FHA owners who have bought in the past couple of years with 3.5% down underwater and lead to more people walking away and foreclosures….another downward spiral. I would suggest people with 20% downpayment should now just hold tight and watch this play out.

[andymajumder]

They need to be careful how they reduce more people from relying on FHA loans….but I don’t see how things will not get worse from here.
37% of all loans in SD county in April were FHA loans…I am quite sure in the sub 500K market the share of FHA loans is much larger, these are all people with bought with 3.5% – 5% down. Now even if insurance premiums go up half as much as what you mentioned here (FHA loans are already quite expensive), FHA buyers will shrink considerably which in turn will shrink the no. of buyers significantly (there’s no way suddenly more buyers with high downpayment are going to emerge). This will definitely pull prices lower and thus take a lot of the existing FHA owners who have bought in the past couple of years with 3.5% down underwater and lead to more people walking away and foreclosures….another downward spiral. I would suggest people with 20% downpayment should now just hold tight and watch this play out.

[andymajumder]

They need to be careful how they reduce more people from relying on FHA loans….but I don’t see how things will not get worse from here.
37% of all loans in SD county in April were FHA loans…I am quite sure in the sub 500K market the share of FHA loans is much larger, these are all people with bought with 3.5% – 5% down. Now even if insurance premiums go up half as much as what you mentioned here (FHA loans are already quite expensive), FHA buyers will shrink considerably which in turn will shrink the no. of buyers significantly (there’s no way suddenly more buyers with high downpayment are going to emerge). This will definitely pull prices lower and thus take a lot of the existing FHA owners who have bought in the past couple of years with 3.5% down underwater and lead to more people walking away and foreclosures….another downward spiral. I would suggest people with 20% downpayment should now just hold tight and watch this play out.

[andymajumder]

They need to be careful how they reduce more people from relying on FHA loans….but I don’t see how things will not get worse from here.
37% of all loans in SD county in April were FHA loans…I am quite sure in the sub 500K market the share of FHA loans is much larger, these are all people with bought with 3.5% – 5% down. Now even if insurance premiums go up half as much as what you mentioned here (FHA loans are already quite expensive), FHA buyers will shrink considerably which in turn will shrink the no. of buyers significantly (there’s no way suddenly more buyers with high downpayment are going to emerge). This will definitely pull prices lower and thus take a lot of the existing FHA owners who have bought in the past couple of years with 3.5% down underwater and lead to more people walking away and foreclosures….another downward spiral. I would suggest people with 20% downpayment should now just hold tight and watch this play out.

[HLS]

It should be clear that FHA/Fannie/Freddie DO NOT make housing affordable as they were intended to do, they make housing unaffordable by allowing prices to remain inflated.

The govt CANNOT let housing collapse completely. It is too large a part of the economy. They will drag out the pain for years and hope that the more recent buyers will be a better risk than the previous buyers.

The longer it takes, the more stable the market becomes and they look like they fixed it.
Many established areas will find their own bottom through normal supply and demand, sooner rather than later.
If unemployment gets worse, housing will get MUCH worse.

Housing market is just a cross between a Ponzi scheme and multi level marketing that allows many people to profit, but some people do get burned.

[HLS]

It should be clear that FHA/Fannie/Freddie DO NOT make housing affordable as they were intended to do, they make housing unaffordable by allowing prices to remain inflated.

The govt CANNOT let housing collapse completely. It is too large a part of the economy. They will drag out the pain for years and hope that the more recent buyers will be a better risk than the previous buyers.

The longer it takes, the more stable the market becomes and they look like they fixed it.
Many established areas will find their own bottom through normal supply and demand, sooner rather than later.
If unemployment gets worse, housing will get MUCH worse.

Housing market is just a cross between a Ponzi scheme and multi level marketing that allows many people to profit, but some people do get burned.

[HLS]

It should be clear that FHA/Fannie/Freddie DO NOT make housing affordable as they were intended to do, they make housing unaffordable by allowing prices to remain inflated.

The govt CANNOT let housing collapse completely. It is too large a part of the economy. They will drag out the pain for years and hope that the more recent buyers will be a better risk than the previous buyers.

The longer it takes, the more stable the market becomes and they look like they fixed it.
Many established areas will find their own bottom through normal supply and demand, sooner rather than later.
If unemployment gets worse, housing will get MUCH worse.

Housing market is just a cross between a Ponzi scheme and multi level marketing that allows many people to profit, but some people do get burned.

[HLS]

It should be clear that FHA/Fannie/Freddie DO NOT make housing affordable as they were intended to do, they make housing unaffordable by allowing prices to remain inflated.

The govt CANNOT let housing collapse completely. It is too large a part of the economy. They will drag out the pain for years and hope that the more recent buyers will be a better risk than the previous buyers.

The longer it takes, the more stable the market becomes and they look like they fixed it.
Many established areas will find their own bottom through normal supply and demand, sooner rather than later.
If unemployment gets worse, housing will get MUCH worse.

Housing market is just a cross between a Ponzi scheme and multi level marketing that allows many people to profit, but some people do get burned.

[HLS]

It should be clear that FHA/Fannie/Freddie DO NOT make housing affordable as they were intended to do, they make housing unaffordable by allowing prices to remain inflated.

The govt CANNOT let housing collapse completely. It is too large a part of the economy. They will drag out the pain for years and hope that the more recent buyers will be a better risk than the previous buyers.

The longer it takes, the more stable the market becomes and they look like they fixed it.
Many established areas will find their own bottom through normal supply and demand, sooner rather than later.
If unemployment gets worse, housing will get MUCH worse.

Housing market is just a cross between a Ponzi scheme and multi level marketing that allows many people to profit, but some people do get burned.

[scaredyclassic]

can one infer then that current FHA loans are a screaming good deal? They’re 1/3 the price of what they’re going to be, right? Seems like pretty cheap money…relatively speaking….

[scaredyclassic]

can one infer then that current FHA loans are a screaming good deal? They’re 1/3 the price of what they’re going to be, right? Seems like pretty cheap money…relatively speaking….

[scaredyclassic]

can one infer then that current FHA loans are a screaming good deal? They’re 1/3 the price of what they’re going to be, right? Seems like pretty cheap money…relatively speaking….

[scaredyclassic]

can one infer then that current FHA loans are a screaming good deal? They’re 1/3 the price of what they’re going to be, right? Seems like pretty cheap money…relatively speaking….

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