Can You Actually Benefit from FHA Reform?
So last week the President and Congress did a fine job of congratulating each other on passing a stimulus package. That package include provisions to enable the FHA to start securing home loans with greater limits. It also makes it possible for people that have not missed a house payment yet to refinance their home before things get too bad.
But if you meet that requirement, will you actually get a better financing deal from a bank?
The unfortunate answer is no.
The legislation in many regards is like an unfunded mandate. It enables companies to act, but does not force them to act.
They can offer you the same mortgage that has you in bad shape already. They can offer you something worse. If your credit is good, you might be able to get something better.
In this regard, recent interest rate reductions will help you the most, but its going to take the FHA at least 30 days to figure out what they are doing and it could take the industry even longer after that. So in the end, Congress and the President seem to have helped very few people with this. It does add an option for people that are running out of options. It just may not be a better option.
Kind of like giving discounts on travel health insurance to people that do not travel. That is your government at work. If they worked any harder, we would really be in trouble!
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Posted in Mortgage Legislation