07-16-08

Mortgage guidelines in our country are about to get a whole lot more strict then they ever have been. With the Fed seizing IndyMac and worrying about capital reserves of Fannie Mae and Freddie Mac the two source of new money for mortgage banks around the country; the feds are eying much harsher regulation on all kinds of new loans that will ensure that these problems will never happen again but it also does have the side effect of trapping people in their current homes since it is now almost required that you have perfect credit to either refinance or purchase a new home unless you have a lot of equity. Also if you ever plan on buying a home again expect a huge down payment requirement we will never again see 100% mortgages due to all the resulting chaos.

But not all is lost. We still have the FHA under the department of HUD which ensures its own mortgages and have very loose guidelines such has only 3% down for purchases and credit scores down to 550 or so, and FHA mortgages are almost always is a standard 30 year fixed mortgage which ensures no surprises of any kind. FHA even has a foreclosure prevention program call FHASecure (guidelines on top of this page) that will refinance your ARM even if you are currently not in a FHA loan into a 30 year fixed mortgage if you have 5% equity and have not been late more then 3 times in the last 12 months.

In fact many of our hopes are with FHA and a bill that has been worked on for the last few months that would allow basically a FHA approved short refinance on your mortgage. Reducing the total amount owed and giving you a standard 30 year fixed. With this plan it does not matter how late you are or in what condition your credit is. Currently it is solely based on your ability to pay a 30 year mortgage at a reduced principle. Which is great news to millions however the President has threatened to veto the bill because he thinks it would be too much of a bail out. But with that aside the House is still going over the measure and once they are done with their review the next stop will be the Presidents desk it is unclear at this point if the measure will have enough votes to override any veto.

Discuss the news here