Comments on: Interesting insight on defaults of downpayment assistance program loans from the recent FHA training http://mortgagefiduciaries.com/2008/06/interesting-insight-on-defaults-with-downpayment-assistance-programs-from-the-recent-fha-training/ Tue, 07 Sep 2010 01:59:18 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: mf http://mortgagefiduciaries.com/2008/06/interesting-insight-on-defaults-with-downpayment-assistance-programs-from-the-recent-fha-training/comment-page-1/#comment-30 mf Sat, 07 Jun 2008 04:00:21 +0000 http://mortgagefiduciaries.com/?p=42#comment-30 Hi Carl, We need to see more statistics on how many FHA loans are in default. The last report I saw was that FHA defaults were on the rise. Let me go find that link...Here it is. See page 13. This report was delivered from our state regulators last fall: http://www.dfi.wa.gov/cs/pdf/current_residential_mortgage_market.pdf Hi Carl,

We need to see more statistics on how many FHA loans are in default. The last report I saw was that FHA defaults were on the rise. Let me go find that link…Here it is. See page 13. This report was delivered from our state regulators last fall:

http://www.dfi.wa.gov/cs/pdf/current_residential_mortgage_market.pdf

]]> By: Carl Pruitt http://mortgagefiduciaries.com/2008/06/interesting-insight-on-defaults-with-downpayment-assistance-programs-from-the-recent-fha-training/comment-page-1/#comment-29 Carl Pruitt Sat, 07 Jun 2008 03:27:31 +0000 http://mortgagefiduciaries.com/?p=42#comment-29 There was a study contracted out by HUD some time ago that most HUD spokesmen refer to when stating this opinion - which is also the official opinion of HUD. Unfortunately, when reading the study in detail one of the first elements that stuck out to me was that the areas picked for the study also either were at the time, or later became, some of the top areas for mortgage fraud in the country. This element was never addressed in the study. Unfortunately, I have seen that much of the organized crime level fraud - where groups go through whole subdivisions at a time with straw buyers and inflated appraisals - seems to also be focused in on FHA loans with down payment assistance for obvious reasons. I think that this fact skews the statistics that HUD used for the study and even today's current stats. If you can't separate out the fraud, you don't really have a clear picture of how the honest loans with down payment assistance performed. My personal opinion is that far too much attention is focused on areas of the mortgage business that make little difference, while for some reason everyone seems to have been ignoring very obvious methods of avoiding fraud. Just one simple example is the fact that we still ask borrower's for copies of their W2s when that information is now quickly available directly from the IRS with no chance of receiving something the borrower, seller, real estate agent, or loan officer created on their computer. Fraud is the real monster in the closet threatening the whole financial system. The good news is that, in spite of all that, the recent MBA statistics show that FHA defaults are still going down in spite of the increasing popularity of FHA loans. There was a study contracted out by HUD some time ago that most HUD spokesmen refer to when stating this opinion – which is also the official opinion of HUD. Unfortunately, when reading the study in detail one of the first elements that stuck out to me was that the areas picked for the study also either were at the time, or later became, some of the top areas for mortgage fraud in the country.

This element was never addressed in the study. Unfortunately, I have seen that much of the organized crime level fraud – where groups go through whole subdivisions at a time with straw buyers and inflated appraisals – seems to also be focused in on FHA loans with down payment assistance for obvious reasons. I think that this fact skews the statistics that HUD used for the study and even today’s current stats. If you can’t separate out the fraud, you don’t really have a clear picture of how the honest loans with down payment assistance performed.

My personal opinion is that far too much attention is focused on areas of the mortgage business that make little difference, while for some reason everyone seems to have been ignoring very obvious methods of avoiding fraud. Just one simple example is the fact that we still ask borrower’s for copies of their W2s when that information is now quickly available directly from the IRS with no chance of receiving something the borrower, seller, real estate agent, or loan officer created on their computer. Fraud is the real monster in the closet threatening the whole financial system.

The good news is that, in spite of all that, the recent MBA statistics show that FHA defaults are still going down in spite of the increasing popularity of FHA loans.

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