FHA Reform Brings a Great Opportunity—For Lenders and Borrowers
The legislature in Washington has been very busy considering legislation that will modernize the Federal Housing Administration (FHA). The Expanding American Homeownership Act, which was originally introduced in the U.S. Senate in the summer of 2006, will make the most dramatic changes to the FHA since the administration’s inception.
But what do those changes mean to lenders and borrowers?
When the FHA was formed, its mission was to provide a means for more Americans to purchase their own homes. But, while the lending industry has been racing forward, the FHA has made very little change. As a result, many more lenders are turning to nontraditional mortgage products. While these products certainly have their uses, they are sometimes more costly to borrowers and are certainly not a perfect solution in every case.
This “perfect storm” of factors has caused many lenders to steer away from FHA mortgages for years, resulting in a steady decrease in FHA originations. Congress recognized this as a need, and felt the FHA would need to be retooled in order to survive.
In its current form, FHA reform would, among other things, eliminate the 3-percent down payment requirement on FHA loans, add a 40-year amortization option, enable higher loan limits, and lower credit standards. This would enable more “fringe” borrowers—borrowers who are on the fringe of underwriting standards under current FHA guidelines—to qualify for FHA loans, and at terms that are more beneficial to them than some nontraditional products.
The goal of the FHA reform is to make FHA-insured loans easier and more popular for lenders and borrowers to consummate. If Congress is successful, the industry should see an increase in FHA originations, as well as a corresponding drop in the default and foreclosure rates.
Please contact us at vmp-customersupport@wolterskluwer.com or 800.521.7291 to evaluate your current government loan products, or to add government loans to your product offering.
Subprime Mortgage Illustrations
As the shake-up in the subprime market continues, regulators and legislators have been anxiously searching for ways to help consumers understand the consequences of financial decisions, and how those decisions will affect them in the future.
In conjunction with the final statement of Subprime Mortgage Lending Statement (72 FR 37569), the agencies have decided to issue proposed illustrations to assist lenders in providing this information to consumers as they move towards implementing the Subprime Guidance recommendations. The proposed illustrations are out for comment until October 15, 2007. Wolters Kluwer Financial Services will continue to monitor this issue to keep you up to date on any new developments in this area.
New Changes to Spanish CHARM Booklet
Following suit to the changes that took place with the Consumer Handbook on Adjustable Rate Mortgages (CHARM) earlier this year, the Federal Reserve Board has updated the Spanish version. The updated version provides consumers information pertaining to Payment-Option and Interest-Only ARM loans.
The revised booklet has a mandatory usage date of October 1, 2007. Wolters Kluwer Financial Services offers both versions, English (VMP20) and Spanish (VMP20S), as released by the board of Governors of the Federal Reserve System.
Please contact us at vmp-customersupport@wolterskluwer.com or 800.521.7291, or get in touch with your sales representative for questions about the booklet, or to place your order.
Improve Your Compliance Management
Register now for StateLink: Compliance Made Easy, a free live webinar on October 23, 2007, 2 P.M. - 2:45 P.M., EDT.
Managing compliance is one of the most challenging aspects of mortgage lending. But, having the right tools can make all the difference. StateLink® is an easy-to-use online solution from Wolters Kluwer Financial Services | VMP® Mortgage Solutions that gives you instant access to trusted compliance information whenever you need it.
With StateLink, you get state and federal mortgage law content for all 51 jurisdictions with plain language interpretations. Plus, the standard VMP Mortgage Solutions form viewing and field help text make it simple for our customers to maximize the value of their VMP Mortgage Solutions document libraries.
During the webinar, you’ll learn:
- How recently enacted legislation impacts your loan documentation
- What recording requirements are expected from you
- How to better understand and prioritize your compliance updates
- How to view and print sample documents with field help text
Register for the FREE webinar to discover the advantages of StateLink.
Look What I Read on ComplianceHeadquarters.com!
For reliable, timely, and concise compliance information, check out ComplianceHeadquarters.com. Now it offers even more in-depth information on mortgage, deposit, lending, indirect lending, IRAs, CESAs, HSAs, financial crimes enforcement, and state law issues. Plus, it now includes new features like Compliance 101, with easy-to-understand tutorials on compliance basics.
Log on to ComplianceHeadquarters.com today and sign up for our compliance email alerts.
REMINDERS
- Want to take a closer look at SDX Secure Document Exchange but missed the live demonstrations? It’s never too late to watch the recorded version.
- Missed an issue of the VMP® Information Newsletter? Access previous issues in the archive.
