FHA Guidelines regarding foreclosures and first time home buyers

by Dan Havey on August 23, 2011

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Part 7
Welcome back to the Velocity of Money this is Michael J Barnes and you are listening to KFNX 1100AM Arizona’s news talk leader.

Don’t forget you can listen online streaming at www.1100KFNX.com and that is streaming 24/7 also another thing I really want to point out here is there is a great show on here Friday nights at 9pm and it is called “Crowded Planet Radio” it is a great show that talks about how our planet is crowded with stupid people I think is the best way to put it and a couple of the guys who put this together are close personal friends of mine that’s every Friday night you will get some great kicks out of it you can listen to it streaming online 9pm Friday nights or you can also listen at 1100AM every Friday night.

I just have one question for you Michael, is this a show purely about people working on Wall Street and working for AIG or what? No it is not just about them it’s about the lady who tells her kids that, well she doesn’t like the sign that says watch your kids or I will watch them for you.

Stuff like that.

The Darwin Awards those types of things.

Ok I was just checking because I thought this was a story about all the mortgage backed securities that were going under It started at the top and it worked it’s way down the reality of it is that people were buying homes, not reading what they were signing not understanding how it worked and shame on the people who were putting it in front of them knowing that they didn’t know and we all need to take a little responsibility here for this past crisis.

It is not just the Wall Street firms; it’s not just the mortgage companies and banks, the brokers have little in fact we didn’t create the loan products that people were buying we were merely disseminating it to the public.

I am glad to say I was not a part of any of that I was able to stay away and do traditional, conventional type financing for people.

So luckily I did not have a lot of clients who got stuck into that nightmare unfortunately.

Speaking of that nightmare, Dan when we talk about the people who have had foreclosures their lives have been turned around, turned over and they think that there is no where for them to go.

One of the nice things about the Federal Housing Administration loan the FHA loan that’s the first time home buyer type loan, the minimum down payment loan is 36 months, 3years after you have had a foreclosure you will qualify to purchase a home again so it is important so if this has happened to you, you need to point your future away from the flame you need to save your money, do your best, work as tightly as you can on a budget and look forward to that time when you can go back out and buy a home again.

Property values are going to be up from where they are today but there is still going to be plenty of great value out there, and there are not going to be loan products that are going to get you in trouble again.

They won’t exist.

What really caused the great inflation in home values starting in about 2002 was they were just getting crazy, I won’t get into a whole lot of technical stuff about mortgage backed securities and all that but the lenders were creating products, selling them off their books, thinking that they never had to worry about them again and they sold trillions of dollars worth of these loans and those are the ones that are going bad.

Ones that were toxic in the first place: the stated incomes, the option ARMS, all those loans they are all gone now.

It reminds me, I was saying earlier today we are back to where we were in financing in 1992-1993back when the houses we said earlier median home price for $70,000.

Now I do not think we are going to go anywhere near that I think at $130,000 we are getting real close to the bottom of the market and what I was thinking was when I got into the business in 1995 and you were in at about the same time I was, and I remember talking to a guy who comes into our office to sell us these loans and this is the very beginning of the really crazy stuff and he was saying we can do 70% no doc loans.

We go, what do you mean? If somebody puts down 30% they don’t have to verify anything, they do not have to verify their employment; they do not have to verify taxes, anything.

We were absolutely floored by that by the peak of the market we were doing 100% no doc loans.

If you were breathing basically they gave you a loan and the credit scores did not have to be that high, I think I saw them as low as 600
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