FHA SECURE FLOPS

Remember the FHA Secure Loan? It was the Bush Administrations loan that was to help borrowers with sub prime loans refinance their property into a safe FHA loan? Well the report is in and it is a flop of major proportions.

If you remember to qualify for this loan you have to be in a sub prime loan and all payments would have been made on time until the interest rate reset. When it reset you would not have been able to make the payments and at that time got behind on the payments. You would have to qualify for the FHA loan in all other areas of income, job stability etc. Sub prime loan, qualified for a prime loan; seems to be a disconnect here. You must have been behind, you would not qualify if you were current at the time you applied for the refinance. Something a bit discriminatory here don't you think? Why not help the rest who are trying to stay current? You must have equity in the property of at least 2.25% to qualify or the lender who had the mortgage could take a second lien on the property for the difference. Lets see, loan fraud, sub prime, 100% loans, inflated appraisals, doesn't seem to go hand in hand with having equity. The phrase designed to fail comes to mind for me.

When this loan was announced the mortgage lending community just scratched their heads and wondered how in the world anyone would or could qualify. The confusion has now proved to be on the money. With all the money spent and all the borrowers who might qualify not applying and all the hype and BS associated with this Government program the numbers prove once again the Government is here to help is just not a reality. What were they thinking?

I don't remember what the exact estimates of the FHA Secure program were but as I recall it was projected to allow some 250,000 families to refinance and the actual # of closings to date is less than 290. In my book that is a failure of major proportions and just proves again in my opinion the more Government tries to help the more it gets screwed up. All of the news of all the laws and all the politicians coming to help hopefully won't make the problems worse than they already are going to be.

I wouldn't bet on it come to think of it.

More to come

Lonny