by Nancy Osborne, COO of ERATE®
The Federal Housing Administration (FHA) is a step closer to taking on some $300 billion in new mortgages as the House of Representatives signed off on a borrower assistance plan in hopes of supplying over 500,000 distressed homeowners with less costly government FHA insured mortgages. Homeowners now thought to be at too high a risk to qualify for a loan through channels currently available could refinance their mortgage into an FHA-backed loan under certain conditions. Primarily a borrower must show they can afford to make re-payment on the new FHA refinanced loan and secondly the current lender must agree to take a hit by providing a principal reduction to the borrower's existing mortgage balance. Additionally borrowers who refinance under the FHA terms must agree to share 50% their equity if they are able to refinance or sell their home profitably in the future. The proposed plan is expected to cost close to $3 billion over the course of five years and is at the forefront of a larger plan proposed by House Financial Services Committee Chairman Barney Frank along with others.
The mounting problems of the housing crisis are caught up in election year politics where the window of opportunity to pass legislation may be curtailed by the upcoming Presidential and Congressional elections in November. Therefore the window of opportunity to accomplish something meaningful may be slipping away and both the House and Senate are eager to get something done which both parties can agree on and the White House can sign off on in the backdrop of election year politics. Additional cross-party measures which may be included in the bill are:
Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.
"I am addicted to Bloomberg TV" says Nancy.
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