Based upon information available as of this date, here's an example of how the new FHA program might work
Phoenix, AZ (PRWEB) August 10, 2008
H L Quist, a Valley resident for thirty-six years, believes that the local real estate market will bottom this year and forecasts another boom starting in 2009. In April, 2005, H. L. Quist forecasted that the "Greenspan Plan" to promote all forms of consumer borrowing and spending would implode causing the real estate and credit meltdown aftermath experienced in 2007 and 2008.
Quist, who has taught "Cycles & Trends in Real Estate at the Southwestern School of Real Estate for the past fifteen years, says that, "All markets move on fundamentals and emotion. The new 'Housing & Economic Recovery Act of 2008' just passed by Congress and signed into law by President Bush, changes the fundamentals. The bill greatly expands the Federal Housing Administration (FHA) which will insure up to $300 billion in new loans for desparate homeowners who cannot qualify for FHA loans under the existing rules and law. The new FHA along with the Hope Now Alliance will slow the surge in foreclosures permitting the market psychology to also change."
"Based upon information available as of this date, here's an example of how the new FHA program might work," explains Quist.
"A homeowner (who has spent at least 31% of their income on a mortgage)has an existing high interest sub-prime loan with (let's say)Countrywide Financial. The loan may already be in default as is 48% of Countrywide's $30 billion sub-prime portfolio. The borrower can refinance with the new FHA on a 30-year fixed rate loan at an interest rate significantly lower than any prime borrower on a conventional basis. Countrywide agrees to write down their mortgage to 90% of the current appraised value in exchange for a new loan guaranteed by FHA.The borrower presumably now has a loan that is affordable, Countrywide owns a loan that is fully valued on its balance sheet and the risk of default is assumed by taxpayers."
Quist, now retired, worked thirty-five years in financial services and ten as a real estate developer and is the author of "The Aftermath of Greed: Get Ready for the Coming Inflationary Boom." He is also the author of 3 other non-fiction and fiction books.
H L Quist