FHA

IN A MOVE that could provide stronger consumer protections for more than 1 million new homebuyers a year, the federal government plans to take a novel, get-tough approach with lenders: It's going to hold banks and mortgage companies responsible for the number of buyers they finance who fall into default or foreclosure within 24 months of closing.For those lenders deemed to have too many seriously delinquent new customers on their books, the government plans to pull the plug -- cutting off their rights to receive federal mortgage insurance to back additional home loans.

Alarmed at indications of widespread real estate fraud across the country, a Senate subcommittee has quietly launched an investigation that could throw a national spotlight on property flipping in Baltimore.Senate Permanent Subcommittee on Investigations staffers have begun interviewing state and federal criminal investigators who are looking into property flipping and mortgage fraud in Baltimore, as well as others familiar with the problem.More than 2,000 Baltimore properties have been bought and quickly resold over the past three years for at least double the original purchase price.

Julie and David Betz were diligently saving up for their first home when James L. Stewart, of First Home Mortgage, pointed out a little-known Federal Housing Administration financing option.It is a secondary loan that allows potential homebuyers to borrow money for a down payment against other material assets, frequently a car or jewelry."It's the only loan I'm aware of where the buyer can use [virtually] no money of his own to buy a house," Stewart said.Betz acknowledges that he was skeptical at first.

Higher loan limits on Federal Housing Administration loans may become a reality after the U.S. House of Representatives passed legislation Wednesday.The legislation raises the FHA's mortgage insurance limits for single-family homes to a higher range, beginning at $109,032 up to $197,620. The current range is $86,317 to $170,362.The Senate approved the FHA measure July 17 as part of its appropriations legislation. A compromise bill must be approved by Congress before it goes to President Clinton to sign into law.The Department of Housing and Urban Development wanted to raise FHA-insured loans to a single limit of $227,150, which would put it on a par with Fannie Mae and Freddie Mac loan limits.

YOU MAY not be familiar with the legal term "qui tam," but a Clinton administration Cabinet member wants it to symbolize a new era in consumer protection for homebuyers and mortgage applicants.Qui tam -- Latin for "who, as well" -- is a long-standing legal concept meaning essentially, "he who sues on the government's behalf as well as for himself." It has little or no current connection with buying a home or getting a loan.But Andrew M. Cuomo, secretary of housing and urban development, plans to use the concept in a drive to toughen protections for borrowers using Federal Housing Administration (FHA)

THE 800,000 homebuyers who use the federal government's largest housing finance program every year appear to be on the verge of getting a level of consumer protection that other homebuyers lack: mandatory home inspections prior to purchase, with a three-day legal right to bail out of the deal.Under legislation heading for the House of Representatives, no one could buy a home more than 1 year old with a Federal Housing Administration (FHA) insured mortgage without first obtaining a detailed, professional inspection and report on the "physical structure and systems" of the property.

The failure of Congress last week to pass reform legislation on one of the hottest consumer issues in real estate -- overpayment of private mortgage insurance (PMI) premiums by homeowners -- raises serious questions about whether legislative relief will be possible during 1998, a year in which the entire House is up for re-election.It also raises practical questions for millions of homeowners who already are paying PMI premiums, but may be unclear about how and under what conditions they can terminate their mortgage insurance policies.

WASHINGTON -- Reacting to warnings that several hundred senior citizens have been victims of a growing ruse involving reverse home mortgages, the Clinton administration announced yesterday that it would prohibit federally approved lenders from doing business with companies charging a large processing fee for mortgage information.The action is designed to "put an end to a scam which has been targeting senior citizens and literally charging them thousands of dollars for nothing," Housing and Urban Development Secretary Andrew Cuomo said.

WASHINGTON -- If you automatically associate the words FHA (Federal Housing Administration) home mortgage with bureaucratic paperwork hassles at application and glacial processing times before closing, you may need to update your image.This summer, thousands of mortgage applicants across the country will get the first glimpse of a new, electronic FHA, where you don't have to carry stacks of your most personal records to your loan officer's desk, and where the average mortgage processing time drops from six weeks to six days.

Easing fears that congressional budget slashing would halt ++ efforts to build and renovate affordable apartments in Maryland over the next few years, lawmakers partially restored funding to a federal housing program late last week.The House voted Thursday to retain Federal Housing Administration mortgage insurance for multifamily housing, a turnaround from an earlier bid that threatened the construction, renovation or refinancing of up to 21 privately owned projects with more than 4,000 market-rate apartments.

Dorchester County gets funds for water projects Dorchester County will receive a $3 million injection of federal stimulus funding to help build water and sewer lines and a stormwater management facility at a technology park in Cambridge, federal officials said Friday. The federal Economic Development Administration grant is expected to help create jobs and encourage private investment in the area, officials said. The project was made possible due to the American Recovery and Reinvestment Act of 2009.

Near the peak of the housing frenzy four years ago, 75 percent of homes sold in the Baltimore metro area went to buyers with conventional mortgages - loans not insured by government agencies. Now such deals are much fewer and farther between. Thirty-five percent of Baltimore-area buyers got conventional loans last month, according to Metropolitan Regional Information Systems. The share of buyers turning to Uncle Sam - particularly for Federal Housing Administration-insured mortgages - is way up in these post-bubble, post-subprime times.

You might be able to use the $8,000 first-time homebuyer credit to buy your house, instead of having to purchase the house first and then claim the credit on your tax return. The U.S. Department of Housing and Urban Development says that the tax credit can be applied to cover purchase costs, including in certain cases the down payment, if you are taking out a mortgage insured by the Federal Housing Administration. This doesn't apply to other types of mortgages. "It is a very attractive offering, and basically it addresses one of the hurdles that keeps more people from buying a home - getting help with the down payment or paying closing costs," says Bob Meighan, a vice president with TurboTax.

After 10 years of near-dormancy, the Federal Housing Administration - unable to compete in an era dominated by the subprime loan market - has lately been making a comeback as an insurer of home loans in Baltimore. Unfortunately, today's FHA-approved mortgage brokers are frequently yesterday's subprime brokers. Fraud has tainted the FHA loan process - and strong steps must be taken in response. Available financing is essential to ending the housing crisis and enabling qualified buyers to purchase or refinance responsibly.

In the current credit squeeze, if you have less than a 20 percent down payment, there's pretty much only one major source of mortgage financing available: the Federal Housing Administration, the Depression-era home loan insurance agency that still offers 3 percent down, 30-year fixed-rate mortgages with consumer-friendly credit standards, even on jumbo loans in high-cost areas. But there is a potentially troublesome problem looming for FHA: New loan volume is exploding - tripling in the past 12 months alone - and Congress just handed the agency the responsibility for virtually all the government's efforts to keep economically distressed homeowners out of foreclosure by refinancing their unaffordable loans.

WASHINGTON - Last August, President Bush promised to help homeowners who had fallen behind on their mortgage payments refinance with stable government-insured loans. This month, officials asserted that more than 150,000 people had benefited. But federal statistics show that fewer than 2,000 homeowners at risk of foreclosure have been helped by the program, which is run by the Federal Housing Administration. Most people who have refinanced are homeowners who have made their mortgage payments on time, not the borrowers in crisis who were the expected beneficiaries of the president's plan.

President Bush outlined steps yesterday designed to help homeowners who can no longer afford their mortgages, including broader access to federally backed mortgage insurance. But mortgage professionals and community activists were split on how far the government should go in providing assistance - and how many people should benefit from it. In his Rose Garden address yesterday, Bush took pains to note that his administration's proposal should not be considered a "bailout" of homeowners who recklessly extended themselves or mortgage lenders who peddled products that left their customers imperiled.

Modernizing FHA can aid homebuyers When the author of "FHA must not abandon its mission" (Opinion * Commentary, June 28) testified at a House hearing on April 5, she received bipartisan criticism for her misleading and inaccurate portrait of proposed legislation to modernize the Federal Housing Administration. Reps. Maxine Waters (a Democrat) and Gary G. Miller (a Republican), in particular, took great exception to her argument that the proposal would make FHA mortgage financing more costly for lower-income homebuyers.

Clarification In a recent column on legislation to expand Federal Housing Administration mortgages to more potential homebuyers, the maximum mortgage amount under the bill would be the median home price for any metropolitan area, but not to exceed the Fannie Mae-Freddie Mac limit, which is adjusted annually. The current limit is $417,000. An unusual Capitol Hill alliance of liberal Democrats, conservative Republicans, commercial banks, real estate brokers, ethnic group lobbies, homebuilders and mortgage brokers is pushing for legislation that could give thousands of first-time home purchasers a better deal than they get in the mortgage market today.

The federal government's biggest home mortgage program streamlined itself at the end of December, and that could be good news for buyers, sellers, realty agents and builders in 2006. In fact, the Federal Housing Administration's decision to eliminate or soften many of its onerous rules about property conditions and mandatory repairs should be a stimulant to the entire housing market this year. It could help open low-down-payment mortgages with no prepayment penalties to thousands of first-time, moderate-income purchasers who might have turned to higher-fee "sub-prime" alternatives instead.