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Schumpeter Reincarnate


Joined: 24 May 2008
Posts: 221490

Re: Discussion on Subtly Misleading LA Times Article Distorts I
PostPosted: Thu Feb 12, 2009 5:00 am Reply with quoteBack to top

http://ml-implode.com/viewnews.....Downp.html
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thetruthfromNC
Flash in the pan


Joined: 19 Nov 2008
Posts: 43

FHA self-funded DPA
PostPosted: Thu Feb 12, 2009 10:54 pm Reply with quoteBack to top

This article and others like it also mislead the truth. Per HUD the defaults of DPA loans are double the norm. Since FHA averages 3-3.5%, the REAL number must be 6-7%, not 20%.

What FHA should do IS come out with a zero down payment program with higher upfront and monthly MIP to cover the additional loses.

Some will say that's what got us into the problem in the first place, but for those I have one question I have asked over and over again with no response.

If no money down doesn't work then why do we NEVER hear of problems with USDA loans that have always required no money down. Maybe some of the people at HUD need to talk to the USDA people and learn a thing or two.

Actually the credit requirement are higher at USDA, which makes my point, if you select the right borrowers you can allow them to buy with no money down.
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Do_the_math
The WhistleBlower


Joined: 14 Mar 2007
Posts: 2564
Location: Groovy Town

Re: FHA self-funded DPA
PostPosted: Fri Feb 13, 2009 1:31 am Reply with quoteBack to top

thetruthfromNC wrote:
This article and others like it also mislead the truth. Per HUD the defaults of DPA loans are double the norm. Since FHA averages 3-3.5%, the REAL number must be 6-7%, not 20%.


The combined delinquency and default rate for FHA loans is just over 20% according to HUD's NW site. While nobody really knows what the true delinquency, default, or claim rate is for FHA loans involving SFDPA, it is undisputed that the rate is at least 50% higher than loans not involving seller-funded assistance (per SFDPA provider commissioned reports). However, government reports and government sponsored reports indicate that the default rate is 2-3 times higher than loans involving SFDPA. No matter how you slice it, delinquency, default, and claim rates are substantially higher for loans involving SFDPA. So, when we are looking at an overall delinquency rate that is over 19%, the rate of delinquency/default on loans involving SFDPA has got to be scary.

This means that at least 1 in 5 SFDPA borrowers is currently delinquent or defaulted on their FHA loan. Hence, I call B.S. on the "94% success rate" that SFDPA spew constantly.

Quote:
What FHA should do IS come out with a zero down payment program with higher upfront and monthly MIP to cover the additional loses.

Some will say that's what got us into the problem in the first place, but for those I have one question I have asked over and over again with no response.

If no money down doesn't work then why do we NEVER hear of problems with USDA loans that have always required no money down. Maybe some of the people at HUD need to talk to the USDA people and learn a thing or two.

Actually the credit requirement are higher at USDA, which makes my point, if you select the right borrowers you can allow them to buy with no money down.


Couldn't agree with you more on this and its exactly what we are asking the SFDPA supporters. I've even offered perimeters that are essential for low and no down programs.

Frankly, the SFDPA organizations aren't interested in 100% programs because 100% encroach on the SFDPA business. In fact, when Ameridream was given an opportunity to support H.R. 3043 (a FHA 100% pilot program) they recommended that the program be limited to borrowers with credit scores at or over 700 due to the risk. And mind you, H.R. 3043 was a well-thought piece of legislation that included mandatory buyer education and other protections that are not present in H.R. 600.

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title_gal
Demolition Man


Joined: 13 Dec 2007
Posts: 2417

Re: Discussion on Subtly Misleading LA Times Article Distorts I
PostPosted: Fri Feb 13, 2009 2:41 am Reply with quoteBack to top

The fight against SFDPA must go on. Now is the time to get all the crooks that invaded this industry out. We must stand together and say "no more". We must make a stand.

This is a great piece and I am once again so proud to be a part of this place.

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"Since the general civilization of mankind, I believe there are more instances of the abridgement of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations." - James Madison - 1788
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Winston Smith
Dud?


Joined: 11 Feb 2009
Posts: 2

Out of the Closet
PostPosted: Fri Feb 13, 2009 5:39 am Reply with quoteBack to top

The very existence of these phony gift programs is an absolute disgrace to the industry and has been from the beginning. This industry has earned its ignominious reputation for having no moral or ethical compass.

Exploiting unsuspecting first time homebuyers with false promises of free money is disgusting. The skeletons will burst from the closet bearing shiny bracelets.

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Such is the irresistible nature of truth that all it asks, and all it wants, is the liberty of appearing. - Thomas Paine
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