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Defaults on Government Backed Mortgages

Uncle Sam

Defaults on Government Backed Mortgages

Defaults on government backed mortgages, or FHA, have started to rise! Lately, FHA mortgages have been what just about everyone has been using to purchase their homes. Add to the mix the tax incentive, and people are out there taking full advantage of the government money.

Well, the news, today, isn't good. The government has been experiencing more than usual defaults on loans, with a few lenders at the root of the problem. To overcome this problem FHA is considering tightening their loan limits AND raising their requirements for credit scores.

This will impact the small recovery we've experienced; it won't help the market at all! And it's because of a few greedy lenders. In light of what we've recently gone thru, it's just plain irresponsible!

What do you think? What are you seeing in your market?

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Marianne Snygg, GRI, ABR, ASP
Broker Associate
ERA Herman Group Real Estate

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Colorado Springs and Monument Real Estate

Comment balloon 8 commentsMarianne Snygg • December 02 2009 10:59AM

Comments

The defaults in Florida and other troubled markets are just starting to boil.  This is going to be far worse than the crisis last year, and this will snowball.

Posted by Alexandria Virginia, Real Estate Editor (Featuring Susan Craft, CRS, REALTORĀ® - McEnearney Associates) about 9 years ago

Hi Marianne.  Seriously, didn't we see this coming?

Posted by Diane Rice, SFR, SRES, CNC ( Rice Prprty Mgmnt & Rlty, LLC, South Holland, IL) about 9 years ago

Oh Susan, I hope it won't get worse, but better. Both for my personal finances and my business.

Hi Diane: Yeah, there's been a lot of talk about it. I hope it won't come to pass.

Posted by Marianne Snygg, ABR, ASP, GRI, SFR (ERA Herman Group Real Estate) about 9 years ago

Marianne, this isn't good news, but I read today that they know who some of these irresponsible lenders are and they will going after them.

Posted by Mary Douglas, REALTOR, Red Feather Lakes, Colorado (United Country Ponderosa Realty, Red Feather Lakes, Colorado) about 9 years ago

There is a proposal to stop giving mortgage brokers the ability to be approved to do FHA loans. And their "sponsoring" lender must agree to take the entire responsibility of the loan they accept from a mortgage broker. PLUS the asset requirement may go from $250,000 to $2.5million. This could become VERY intereting (again!)

Posted by Ruth Vogt, 719-592-0855 Apply 24/7 www.ColoradoHomeLender.com (Fairway Independent Mortgage, LLS. Equal Housing Opportunity. Regulated by the Division of Real Estate.) about 9 years ago

I recently read that the demographics of the defaulters is changing, and moving "up the food chain".  Not just those that couldn't afford the loan in the first place, but those that could, and still can, just choosing not to...They are upside down, and they don't want to be...

Posted by c m about 9 years ago

Marianne  The really bad news is that the government and lenders will just allow another loophole

Posted by Karen Kruschka, - "My Experience Isn't Expensive - It's PRICELESS" (RE/MAX Executives) about 9 years ago

Hi Mary: Yes, They have identified the lenders at fault and are taking action. But, I fear an over-reaction to this situation that will effect all of us.

Hi Ruth: I found your comments extremely informative! Thank you. But, if they do make the supporting lender responsible for the loan, won't that have an extreme effect on mortgage brokers? Perhaps driving them out of business?

Could you explain more to me about the asset requirement, please?

How can I, as a realtor, know the difference between a lender and a mortgage broker? It seems to me that some mortgage brokers are in such a large firm that they can appear to be lenders. Thanks.

Hi Cheryl: Yesterday was fun! I enjoyed talking with so many of my friends. And the tea was fun, too.

There have always been, thru this entire foreclosure mess, those that just want to get out of their mortgage. They are tired of the house, or use this as an excuse to part from their spouse, or just want to move to another part of the county. But, as with any situation, there's always the fringe that will take advantage of the situation. And it's these folks, just like the few offending mortgage brokers that make it difficult for legitimate causes to be recognized.

Hi Karen:Carpetbaggers! No matter what kind of laws are written or enacted, someone somewhere will work very hard to find the loophole. As soon as that one's fixed, another will be found, as long are there are those who feel the laws do not apply to them.

Posted by Marianne Snygg, ABR, ASP, GRI, SFR (ERA Herman Group Real Estate) about 9 years ago

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