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Welcome to "Ask the White House" -- an online interactive forum where you can submit questions to Administration officials and friends of the White House. Visit the "Ask the White House" archives to read other discussions with White House officials.
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September 6, 2007
Alphonso Jackson
Good afternoon. Thank you for joining me to discuss some of the immediate steps President Bush and I are taking to help more families keep their homes. Homeownership remains the American Dream. Unfortunately, it has been a source of anxiety recently for some homebuyers. Too many families have been enticed by easy credit offers or steered toward accepting low teaser interest rates in the exotic subprime market. The President and I want to help homeowners in trouble avoid foreclosure. Last week, President Bush introduced FHASecure, which will allow families with strong credit histories who had been making timely mortgage payments before their loans reset -- but are now in default -- to refinance. The average FHASecure loan could save the homeowner $400/month and about $30,000 over the life of the loan. FHASecure and other critical federal initiatives can help homeowners in need of assistance. I hope we can talk about them during our online conversation. Ok, lets take our first question. Hope, from Colorado writes: Alphonso Jackson One of the most important things weve done is introduce a new refinancing initiative that allows homeowners with good credit history who have defaulted on their mortgage payments after their teaser interest rates increased to qualify for an FHA-backed loan. This product, which is called FHASecure, will make more loans available to more American families. The FHA also has terrific foreclosure prevention measures, which last year helped more than 75,000 homeowners (who were in default) avoid foreclosure and keep their homes. Also, you might want to contact a local housing counselor to get advice on buying a home, renting, defaults, foreclosures, and establishing good credit. Heres a link that will help you find a counseling agency in your area: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
Also for your information, the banking regulators, like the Federal Reserve, are also strongly encouraging lenders to tighten underwriting standards so that hard-working families arent put into mortgages they cant afford by unscrupulous lenders. And HUD and many other federal agencies are also working with the Department of Justice to go after predatory lenders.
Michael, from Powell, Tn writes: Alphonso Jackson I would strongly suggest you talk with a HUD-approved Housing Counselor in your area. They will help you figure out how much you can afford considering your income, monthly expenses, downpayment, credit rating, and expected interest rate. Heres a link that will help you find a counseling agency in your area: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm Also, shop for a mortgage loan by talking to several lenders, comparing costs and interest rates, and negotiating for the best deal. Additionally, you might want to consider an FHA-insured loan for a safe, reasonably priced mortgage product. Also, shop for a home by looking into homebuying programs available in your area. Finally, read the fine print of your mortgage before you sign on the dotted line and get a home inspection before you buy.
Good luck, Michael. I hope you find the perfect home.
Rollie, from Fresno writes: 2) Will there be flexibility on the mortgage limits in order to reach working families in California? 3) Will there be flexibility with the terms (eg extend to 40 years) so that the monthly payment will be affordable. Alphonso Jackson
Yes, FHASecure is limited to owner-occupied mortgagors. Currently, FHA is limited by mortgage limits set by Congress. That is why the President has been urging Congress for the past two years to pass FHA Reform legislation which would raise the limit. FHA Reform would raise the mortgage loan limit in California from the current ceiling of $362,790 to a new ceiling of $417,000. This could help thousands of families refinance their high-cost, high-risk loans and get an FHA-insured loan. Also, FHA is currently limited to 30-year mortgage products. Again, FHA Reform would help because it includes a 40-year product.
Cliff, from Brimfield, Ohio
writes: Alphonso Jackson FHASecure is designed for families who are good borrowers and meet our strict underwriting standards, but who are in trouble now that their reset rates have kicked in.. In all likelihood, these are families who could have qualified for a conventional loan but were lured into an exotic subprime mortgage. Only families with on-time mortgage payments under the original interest rates are eligible. They must have good debt-to-income ratios, a stable employment history, and their delinquency must not be due to financial negligence. In essence, we verify that they can actually repay the loan which is a qualification that was sorely missing in much of the subprime loans that are going sour.
In fact, FHASecure will promote good money management, not be a substitute for it. Borrowers will pay mortgage insurance premiums out of their own pockets to offset claims to the FHA insurance fund and ultimately prevent risk to the taxpayer.
Jo, from Miramar, FL writes: Alphonso Jackson Brenda, from Tennessee writes: Alphonso Jackson Sally, from Sacramento writes: Alphonso Jackson
Our FHA-based loans have common-sense underwriting standards: we ensure the borrower can actually repay the loan. I agree with you lenders not doing that smell-test are indeed shady and likely most of them are or will be out of business. Our FHA-backed loans, including this new FHA Secure option, are available now. Anyone who is interested should talk to their lender.
Marcus, from Philadelphia writes: Alphonso Jackson FHASecure will also help thousands of eligible families in the current crisis, and FHA reform legislation will help thousands more avoid these pitfalls in the future.
Were also trying to empower consumers with the tools to read and understand the fine print of the mortgage, and also know when to ask for help before it is too late. We know that while most people facing foreclosure are afraid of their banks, they are much more open to talking to a local non-profit counseling agency about their problems. That's why housing counseling and financial education are so important. This Administration has increased the budget for counseling over 200 percent, with the President requesting another increase, to $50 million, in the coming fiscal year.
Curtis, from Singapore writes: Thanks. Alphonso Jackson Lynn, from Tampa, FL writes: Alphonso Jackson
1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset; 2. Interest rates must have or will reset between June 2005 and December 2008; 3. Three percent cash or equity in the home; 4. A sustained history of employment; and 5. Sufficient income to make the mortgage payment. Michael, from NYC writes: Doesn't logic and common sense dictate that low income families, lack the basic necessity (i.e. MONEY) needed to become a homeowner? Secondly, as the Jump in Foreclosure has happened recently, any update to the figures on FHA foreclosure victims and those saved? Alphonso Jackson Poor is a state of mind. I grew up being the last of 12 children. We didn't have a lot of money, but we weren't poor. We had plenty - we had love, we had each other and it never seemed like we went without. But even though we had modest means, my parents worked hard and provided for us. Sure, not everyone can afford a million-dollar home, but there are plenty of hard-working Americans who have saved and have become homeowners. Becoming a homeowner is the American Dream realized. It gives you a stake in the community. When you own a home, it's yours. It's also the best single way to accumulate wealth and economic security...and that's something you can pass on to your children.
You asked about foreclosure prevention. This year, FHA's loss mitigation measures, which we require our lenders to implement, have helped almost 57,000 FHA homeowners who were in default avoid foreclosure. Neil, from washington, d.c.
writes: 4. How did you come up with the 80,000 figure? It seems like there won't be that many people who have sound credit histories but are in default. 5. With 2 million people facing higher interest rates on adjustable-rate mortgages, how much of a dent will this program make? (80,000 is 4 of 2 million). Thank you. Alphonso Jackson 1. FHASecure will cost taxpayers nothing. Borrowers with FHA-insured loans pay premiums on their mortgage which keeps the Insurance Fund sound and protects taxpayers from risk. This also protects lenders from losses. The Insurance Fund allows lenders to offer lower rates on FHA-backed loans, which enables millions of low- and-moderate income families who would otherwise be locked out of the mortgage market to qualify for home loans. 2. HUD is now allowing eligible borrowers who had good credit history before their teaser interest rates reset to qualify for refinance with an FHA-insured loan. Eligible homeowners not in default have always been able to refinance their existing mortgage into FHA. In fact, FHA's refinancing business has roughly doubled over the past year. We expect to help approximately 120,000 families refinance with the FHA this year. 3. FHA's Insurance Fund continues to run in the black and has more than adequate reserves to cover potential losses. 4. FHA has expert analysts and economists who are constantly studying changes in the market. You're correct, we expect FHASecure to help approximately 80,000 families, if not more. 5. According to various industry estimates, there are just under 2 million resets due in the next two years; about one-quarter, or 500,000, of those mortgages are expected to go into default. So we can help about half (about 240,000) of those hard-working families stay in their homes using FHASecure and our preexisting refinancing products. Now, if Congress approves FHA reform legislation, we could help another estimated 200,000 families be eligible for FHA-insured loans and help many homeowners in high-cost states get the security of an FHA product -- currently we cant help them because our loan limits are too low. Thanks again for the questions.
Alphonso Jackson Again, if you want more information about the Federal Housing Administration or want to see if you are eligible for FHASecure, please call 1-800-CALL-FHA or visit http://www.FHA.gov. Also, dont hesitate to talk to a housing counseling agency in your area if you have questions about refinancing your home loan or are buying a home for the first time. Heres a link that will help you find a counselor in your area: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm Take care. |