Just the Truth Please

Written By: Bonnie Wilt-Hild

Does it ever cease to amaze you how people can twist the facts with regards to almost any situation in order to achieve the results that would most satisfy them even if those results achieve no end. In this day of mass media and the information highway, articles and blogs can be placed on the internet in a matter of minutes and unfortunately, many of the authors of this information have no real experience or responsibility where the content of their article is concerned and articles relating to the mortgage industry are no exception regardless of the type of media by which they conveyed.

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A wonderful and recent example of this is was an article that I read in Business Week a couple of years back which portrayed the Federal Housing Administration and the FHA mortgage insurance program as a covert sub-prime lender who was responsible for costing the tax payers of the United States millions of dollars as a result of defaulted loans. The authors of the article clearly had very limited mortgage experience and their intellectual ability to comprehend underwriting principals as they apply to the FHA mortgage insurance program was non-existent. Unfortunately, many of the readers of the article also had no knowledge of the principals that apply to mortgage underwriting so it was impossible for them to decipher the untruths stated in the article including the most glaring statement which stated the cost to tax payers where defaults were concerned. Anyone familiar with the FHA mortgage insurance program knows the agency is one of the few that is totally financially self-sufficient and does not rely on tax payer dollars for support.
Today was no different. During a short web search today to see what, if anything was going on in the industry, I came across an article titled “No Chance for Investors and the 203k”. I read the article which included a lovely photo of Secretary Donovan with proceeded with a statement that the HUD Secretary bluntly said “NO” to lifting the moratorium on the investor 203k. So for those of you who have been somewhat out of the loop, I will bring you up to speed and then share with you what the good Secretary actually said which of course, was nothing like the article posted today shared as his statement.

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First I would like to say that yes, HUD has suggested that they are considering lifting the moratorium imposed in 1996 allowing real estate investors to participate in the 203k program. This suggestion was made at the end of 2010 however they were very clear that is was simply something that was being considered and at that time, they invited the mortgage industry to participate in a sit down to discuss what guidelines might be re-written where the product was concerned to avoid some of the challenges it faced in the past. This meeting took place in November 2010 and at this time the Federal Housing Administration began to tackle some of the issues that needed to be addressed where the program as a whole was concerned. It is important to remember everyone, that no program is created overnight as there are more than
Just guidelines to consider. Technology, modeling and other like issues need to be addressed. So here we are a mere year later and the question was asked of Secretary Donovan regarding if HUD would lift the ban. His response to this question was and I quote, “I’m open to looking at expanding 203(k). I think there are ways to do it safely and avoid some of the challenges of the past. The problem is that we would need legislation to do this, and unfortunately, I don’t think it would be something that would move quickly given some of the disagreements we’ve had in Congress.” I see nowhere in this statement a blatant “No”, quite the opposite actually, the man simple conveyed the hurdles that needed to be overcome before the moratorium could be lifted and quite frankly, I think his response to the program was quite positive. Now if we could just get Congress to agree, we could be on our way.
In closing I would like to say that I hope those individuals who continue to post erroneous information learn to behave a little more responsibly knowing that many industry professionals read these articles and assume the facts stated are exactly that, facts. For those of you, who are connoisseurs of these articles and posts, simply be aware that some resemble more fictional novel then serious industry information and consume the information cautiously. Have a great week.

About The Author

Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University (www.FHA-Classes.org) as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at: contact@mortgageprocessor.org.

Opinion-Editorial (Op-Ed) Disclaimer For NAMU® Library Articles: The views and opinions expressed in the NAMU® Library articles are those of the authors and do not necessarily reflect any official NAMU® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMU®. Nothing contained in this articles should be considered legal advice.