Vista Mortgage Group Blog

Amazingly, for the first time in the recent months, we are beginning to hear the voice of common sense ....or the voice of a better-informed government and media!

The first indication that our government is beginning to understand our "subprime crisis", was when Bernanke announced that it would not be wise to bail out the Wall Street investors who purchased the mortgage-backed securities!  If they made poor decisions in their investment strategies, they should pay the price.

On August 31, 2007, President Bush, announced his plan to revamp the FHA loan guarantee program and introduce a new FHA program called "FHA Secure"; which will allow people who are currently delinquent to refinance into a fixed rate, providing they have 3% equity in the property and they can show that they made payments on time, until their rate adjusted.

I really believe the the FHA Secure option is a rational, reasonable and potentially effective solution for families who accepted Adjustable Rate loans and were unable to adequately prepare for the adjustment in the rate and a higher payment.

People enter into Adjustable Rate mortgages for many different reasons:         1)  They are offered a lower adjustable rate/payment that they can afford versus a fixed rate/payment that they can not afford    2)  They want a lower rate/payment, knowing that they only intend to stay in the property for a shorter period of time (2-5 years) and they plan to sell before the rate adjusts     3)  They have credit issues that put them into the subprime category of rates and the adjustable rate/payment offers a more affordable payment and a 2-3 year window (with the rate/payment fixed, typically for the first 2-3 years) that should be used to improve their credit history; which would allow them to potentially qualify for better rates in the future.      **** Adjustable Rate loans should always be carefully explained and reviewed with a borrower, so they understand that they will either need to prepare for a higher payment at the time that their rate adjusts OR that they will possibly want to evaluate a refinance before the rate adjusts (if they intend to stay in the property) OR that they will possibly want to sell before their rate adjusts (if that was their initial desire).

more to follow......