Government backed mortgages

[maat55]

If your are planning on buying a home in rural america, you have three weeks left to get an taxpayer backed loan.

Guaranteed Mortgage
The major benefits are:

100% mortgage LTV based on the APPRAISED value
Zero down payment and there is no minimum contribution required.
No limit on seller concessions or gift
No mortgage insurance required
No reserves required
30 year fixed rate only
Lenders must be USDA approved.
Low interest rates, this is not a sub-prime mortgage
Flexible Credit Guidelines.

Few people including real estate agents and loan officers are aware of this government program. If they were, a lot more homes that are on the market today would be selling. Real estate agents and For Sale By Owners should use this 100 percent loan to their advantage in their advertising.

USDA Rural Development Mortgage Guidelines

I guess the government failed to completely destroy the economy, so they are giving an last ditch effort.

[Seeker]

You neglected to quote this fact:

The sad news is that on March 10th, 2010 USDA announced that the funding for this program would be depleted in April of 2010. This has had a major impact on the housing market and the economy. Congress could have prevented this. As of today, Sept 12th, 2010 there is funding but only for 3 weeks, until the end of the fiscal year.

This is for moderate income families. The requirements are rather stringent.

[maat55]

You neglected to quote this fact:



This is for moderate income families. The requirements are rather stringent.

One of those requirements is that you not put any money down. And I happen to know two couples who have qualified, they would not get a loan anywhere else.

My daughter and son-in-law were offered this plan and they turned it down due to they wanted to put money down. This is rediculous by any standard.

[asmom]

If your are planning on buying a home in rural america, you have three weeks left to get an taxpayer backed loan.

Guaranteed Mortgage
The major benefits are:

100% mortgage LTV based on the APPRAISED value
Zero down payment and there is no minimum contribution required.
No limit on seller concessions or gift
No mortgage insurance required
No reserves required
30 year fixed rate only
Lenders must be USDA approved.
Low interest rates, this is not a sub-prime mortgage
Flexible Credit Guidelines.

Few people including real estate agents and loan officers are aware of this government program. If they were, a lot more homes that are on the market today would be selling. Real estate agents and For Sale By Owners should use this 100 percent loan to their advantage in their advertising.

USDA Rural Development Mortgage Guidelines

I guess the government failed to completely destroy the economy, so they are giving an last ditch effort.

This describes the VA home loan program almost exactly and that hasn't destroyed the economy, so why are these loans so objectionable?

[Seeker]

One of those requirements is that you not put any money down. And I happen to know two couples who have qualified, they would not get a loan anywhere else.

My daughter and son-in-law were offered this plan and they turned it down due to they wanted to put money down. This is rediculous by any standard.

Hmmm. Read that section maat.

It does not "require" any money down. But there is nothing saying that you cannot put something down. Nor does it state anything against pre-paying.

[maat55]

This describes the VA home loan program almost exactly and that hasn't destroyed the economy, so why are these loans so objectionable?

I'm under the impression that VA loans are for Vets. Vets do not make an large part of the population.

What is objectionable is that easy qualifications create housing bubbles and high risk forclosures.

[maat55]

You neglected to quote this fact:



This is for moderate income families. The requirements are rather stringent.

As a side note, USDA also offers a USDA Rural Development Direct Mortgage Program for people with low to very-low income. (even people on a fixed income) The guidelines are quite different so you should visit this site: USDA Rural Development Direct Loan

If the credit score is 620 or above the credit is considered acceptable. This is so cool. If the score is 620 or above the documentation is streamlined as follows:

No rental history is required
No credit waiver is required if there are derogatory trade lines like bankruptcy, foreclosures, or late payments for whatever. The only exception is Federal debts.


Seems a little liberal to me. The idea is that these government loans would not make it in the free market which manages risk more efficiently.

[Joan.of.the.Arch]

I'm under the impression that VA loans are for Vets. Vets do not make an large part of the population.

What is objectionable is that easy qualifications create housing bubbles and high risk forclosures.

Perhaps there are not huge number of veterans now, but in the past, there have been huge numbers, especially as compared to the total population.

I lifted this from oh-so-convenient Wikipedia: 16,112,566 individuals were members of the United States armed forces during World War II. There were 291,557 battle deaths, 113,842 other deaths in service (non-theater), and 671,846 non-mortal woundings. As of May, 2010, there were approximately 2,079,000 American veterans still living, a loss of 193,000 in only 8 months

Looks as if post WWII there were15.7 million veterans who might have been eligible for those VA (government backed) house purchase deals. Indeed, there was a huge house building boom at that time. Many, many people used this program. Did it take anything other than being a vet to qualify for that program? Did that program cause the US economy to stumble? Hardly.

I think that just government backing and easy qualification to get that backing is not necessarily problematic. I would look more to problems such as came to a head in the last three years: Banks & other mortgage providers selling the loans so that they themselves were taking very little risk in making a housing loan. Individuals taking mortgages to buy houses that they should not in their wildest imaginations reckon they could ever pay for. Huge insurers such as AGI insuring near infinite dollar value amounts of risk to businesses. Greeedy (that's a typo, but I think it may deserve the extra squealing "e") speculators at all levels of real estate dealings. Yeah, we had a real estate bubble, and the credit industry apart from mortgage providers and also much retail business were all too happy to get in on the expansion and puffing. One fed the other.

The calm relatively stable decades of VA backed loans going to many, many households seems like a demonstration that government backing alone is not what causes a bubble that pops leaving us in recession.