May 27, 2015
One thing that’s important for house hunters to do when looking for a home? Comparison shop. But that’s not just a good idea when it comes to measuring the price tag on a home; it’s also a very good idea to shop around for a lender in the same way you do looking for just the right home to buy with an FHA loan.
A recent blog post on the HUD official site via The HUDdle discusses recent housing trends and developments in the home loan industry. One thing writer Ted Tozer notes, is that there has been a set of important developments in the industry as some major financial institutions dial back their participating in the mortgage lending market.
Tozer writes, “As major banks have reduced their participation in mortgage lending and servicing, nonbanking institutions have stepped in to fill the void, providing needed credit access. Thanks to the flexibility in Ginnie Maes single security platform, nonbanks functioned in the market and disruptions were minimal. However, the evolution from traditional to non-depository institutions has created a challenging environment.”
Tozer, who is the President of Ginnie Mae, also notes that, “While most lenders and servicers are up to the challenge, there are a number of eventsfrom a shortage of refinance or home purchase volume to a failure to hedge mortgage-servicing rightsthat could trigger a cash crunch and make it difficult for them to fund their operations, let alone pay off investors. Since Ginnie Mae expects nonbank lenders to account for approximately 60 percent of our business this year, additional resources are needed to handle the complexities of these institutions, particularly in the measurement of risk.”
Are you as a borrower comfortable using what Tozer describes as a “nonbanking institution” to handle your FHA mortgage? The idea may seem daunting at first, but many borrowers are coming around to the idea.
But whether you’re comfortable or not, the most important thing as a new loan applicant is to make the most informed choice you can about who and how you get your FHA mortgage loan. Doing some research into not just your home options but also your home loan options can be one of the best moves you’ll make as a loan applicant. Some may choose a traditional lender, others may choose the “nonbank” lender; whichever you decide is best, know what the differences and similarities between the two are and how your loan may be affected based on your decisions.
You can contact the FHA directly for a referral to an FHA/HUD approved pre-purchase counselor in your local area who may be able to help with advice and information–contact the FHA directly at their toll-free number: 1-800 CALL FHA.
Do you have questions about FHA home loans?Ask us in the comments section.
As major banks have reduced their participation in mortgage lending and servicing, nonbanking institutions have stepped in to fill the void, providing needed credit access. Thanks to the flexibility in Ginnie Maes single security platform, nonbanks functioned in the market and disruptions were minimal.
However, the evolution from traditional to non-depository institutions has created a challenging environment.
– See more at: http://blog.hud.gov/index.php/2015/05/21/housing-finance-current-state-future-trends/#sthash.W1ObqIO9.dpuf
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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