Lessening the Credit Crunch for Consumers
57704
Finance > Mortgage
Nov 29, 2007
BrettNordin
Lessening the Credit Crunch for Consumers
With trillions of dollars in Adjustable Rate Mortgages (ARMs) beginning to adjust, most American consumers are aware of the personal hardship and economic difficulty ahead. Many outcries for government support has fallen on deaf ears. What the media won't tell consmers is the good news. The U.S. government has taken notice and stepped in to help. Below is a summary of current actions U.S. legislative bodies are taking to mitigate the mortgage crisis. 1) Interest Rate Cuts - Option traders are anticipating the feds to cut to interest rates by 0.25% this month and expect another 0.5% reduction over the next 6 months. This will help lessen consumer payments on revolving debt such as credit cards, home equity lines of credit and auto loans. 2) Loosening of FHA guidelines - With the new FHASecure Act, delinquent homeowners qualify for an FHA-insured refi if they have: * A history of on-time payments for at least six months before their loans reset to higher rates * Interest rates scheduled to reset between June 2005 and December 2009 * 3 percent equity in their home, or the cash equivalent * A sustained history of employment * Sufficient income to make their FHA-insured mortgage payment and all other obligations This move to help homeowners in crisis is one of the best targeted initiatives the White House has supported. On the front lines of the mortgage business, we are seeing the impact first-hand. 3) Raising FHA loan limits - Today the FHA won't insure loans above $362,790 for single-family homes, and even less in lower-cost areas. Under the bill before the House, which is expected to vote in 2007, that ceiling would increase to $417,000. This would help first time home buyers who have otherwise been priced out of the market. 4) Reducing FHA down payment - Under new reform proposals, homeowners would no longer be required to have 3 percent equity or the cash equivalent. They could get an FHA-insured loan with 0 percent down. In urban areas, lessening the down payment requirements helps revitalize neighborhoods through the sense of pride in home ownership. 5) Fannie Mae and Freddie Mac Conforming Loan size - The House Financial Services Committee plans to propose an amendment that would boost the conforming loan limit to $500,000 (currently $417,000), and give the FHA commissioner discretion to raise that limit further during mortgage crises. This is critical to lending relief in high property value states such as California and New York. All of these actions combined could send the right signals to consumers and loosen the housing market. With home prices still bottoming, these actions may just soften the landing. More aggressive actions may be needed and may be considered if the 2007 holiday season signals that a deeper economic crisis is boiling.
For information about refinancing or purchasing in these troubled times, Click Here Brett Nordin is verteran mortgage broker on a mission to raise the ethical bar of mortgage professionals through consumer education.
send email to BrettNordin
Write a Review
Add to My Favorite
Refer it to Friend
Report Article
Other links at Finance > Mortgage
Finding the best mortgage for you can be a tricky thing. There are 9 steps you should take to find the best mortgage for you.
Category:
The Council of Mortgage Lenders? figures are showing a growing trend in interest only tgages. From January to March 2002, 9% of new tgages were interest only. Now take the period from October to December 2005, and the amount of new interest only
Category:
There are many proposed methods of paying off a mortgage early. Let's recap the most popular of these methods and see which ones work best!
Category:
Advertisements for very large mortgages that require only small monthly payments now fill the internet, radio, TV and print media. This article explains how these mortgages work.
Category:
You may be fortunate enough to already own your dream home. From time to time though you may wish that you have additional funds on hand to help you attain your other dreams and goals. Owning a house may be the answer to your prayers in that it can provid
Category:
Site Sponsor
Directory Statistics
Articles: 68252
Categories: 501
Yahoo Entertainment
