HUD and the White House came out today withÂ ideasÂ on what to do about the future of mortgages in America.
They give a few different ideas going forward and place into thought the idea of FHA and a guarantee from the government on a loan with a private funding pool for reinsurance.
Now, the report goes to Congress for the whole thing to become a wrestling match taking who knows how long.
I applaud all the work that has been getting done, but let me reiterate what I have been saying for years as the solution to how government can be involved minimally and only in a catastrophic time while keeping the cost down to consumers.
Letâ€™s have a generic set of guidelines for loans, no limit on the loan size (low or high) where every loan has a private fee that can be financed into the loan so there is less impact on the payment and qualification and the money goes into the fund early.
Also, the underwriting standards need to take into account local and state markets.
A loan in one state/city where there is no income tax is different from one that has taxes. And how about the place where you get weather extremes and the utility bills are higher. Shouldnâ€™t that be brought to focus?
Amazing enough, that loan underwriting is already in place, does 100% financing and has one of the lowest default rates of any loan type. Itâ€™s the VA loan.
I think with their underwriting standards, the insurance pool and no need for Fannie/Freddie, we could be on the path to a near perfect system in a very short period of time.
Add in the Private Mortgage Insurance companies to layer the high LTV loans on a monthly basis.
Done. Mortgages, all secure, cheap and smart.