FHA Is Roaring Back To Life In Salt Lake County
September 18th, 2007 Categories: FHA
FHA Is Roaring Back To Life In Salt Lake County
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For the past few years home buyers have been getting non-government, (it is hard to call some of the past loans conventional) to finance their homes. During this time FHA loans became almost non- existent! In fact, most lenders and agents in the business today have never done an FHA loan. Two thirds of the UT Real Estate Agents have entered the industry in the last five years. Over the past five years the lending business has changed dramatically. Loan officers are now required to be licenced. However, this has only been a requirement for a short amount of time. So with that said most real estate agents and most loan officers don’t have experience with FHA loans.
Because of the loose underwriting guidelines (subprime loans; no document loans) that we have had in the past few years, why would people do an FHA loan? With FHA more documentation is needed, such as: bank statements, pay stubs, tax returns, and verification of income. Imagine some bank asking DO YOU HAVE A JOB? Who has time to find that stuff?
What is an FHA loan? An FHA loans is normal loan except it is “Insured” by the Federal Government. The federal government DOES NOT loan the money. Typically when you have less than 20% down you pay what is called a mortgage insurance. It is an amount that is added to the payment and it goes to the Mortgage Insurer and it insures the lender in the event of a default.
To be an FHA approved Mortgage Company there are requirements. They must have assets, a $250,000 net worth which 20% must be liquid. Credit Report on all Senior Officers or anyone with 25% or more ownership, minimum 3 years experience and a quality control plan. Hmm knowing that Utah has had the distinct honor for leading the nation in loan fraud, choosing an FHA approved company might not be a bad place to start.
In the past FHA Loan amounts were not in line with the markets and physical 
requirements for a home were a little nitpicky and were not realistic. Some examples were a minor crack in an insignificant basement window or a handrail going to the basement that wasn’t varnished. “You have to love that the Federal Government, Corporate Raiders were fleecing pensioners of their life savings and they’re measuring varnish millage on a handrail of an 85 year old house.”
Because of these antiquated requirements most veteran agents stayed away from them and for very good reason.
Over the past few years FHA has been aggressively getting up to speed with the market place. They’re loan amounts are rising to meet market demands and there is legislation going through the system right now that will put FHA in line with FANNIE MAE and FREDDIE MAC guidelines. They are more realistic in their physical nitpicking. They’re minimum safety standards are good just not silly anymore.
In the last few years while a lot of mortgage companies were setting themselves up for bankruptcy, FHA 
has been polishing it’s armour to be the shinning knight that it is.
So if you are talking to a loan officer mention FHA, if you get responses like. They’re no good. We can get get you a better loan than that. TRANSLATION, they are not an FHA approved lender, read the above requirements again.
When confronting a non FHA lender you will hear tired old augments like, FHA requires mortgage insurance. The sub prime lender will tell you they have an 80/20 loan with no MI. Let’s see a 80% first mortgage at 7% interest rate and a 20% second mortgage at 10% interest rate. Hmm if you can’t see where the MI in that scenario is they might offer to sell you swamp land in Florida. Then one of their old trump cards is MI is not tax deductible. As of January 1st, 2007 those households whose adjusted gross income is $100,000 or less their MI premium will be 100% tax deductible.
So here are some basic physical guidelines for FHA: (that still apply)
· Can’t have wood to earth in the foundation
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[…] In the recent past the Salt Lake City Real Estate market was very strong (Salt Lake 3rd Quarter Report) and conventional loans were lax, so FHA was not used to often but is coming back read FHA Roaring Back To Life In Salt Lake […]