He based his optimism on what he called a “confluence of factors” that he believes will encourage more potential homebuyers to take action in buying their own homes this year. These factors include a leveling off in home prices, lower entry barriers for mortgage credit, and reduced costs associated with purchasing a home. He pointed out that the GSE’s (Fannie Mae and Freddie Mac) have been directed to accept lower down payments. In addition, the Federal Housing Administration (FHA) has recently lowered the amount of its mortgage insurance payments.
“All of those things add up to greater opportunity to move from renting to buying in 2015,” Castro said.
He acknowledged that there are still some challenges to be overcome by prospective home buyers. One of the main problems is that since rental costs keep rising, this makes it difficult for people to save enough money for a down payment on a home. Another hindrance is that wages are stagnant. Despite these challenges, Castro thinks that “we’re moving in the right direction.”
DS News tells MHProNews that another major challenge the secretary addressed Wednesday morning was the issue of credit availability, which he said has kept a lot of mortgage applicants with “what historically would have been considered pretty good credit” from buying a home. Through November, the average FICO score for an approved loan application in 2014 was about 726, according to mortgage services provider Ellie Mae.
In addition to reduced FHA mortgage insurance premiums and lower down payment options, Castro mentioned HUD’s “Blueprint for Credit Access.” This is a program created to help expand credit offerings to qualified borrowers through counseling and clarified lending rules.
Some people have expressed fear that offering mortgages to a larger pool of borrowers will degrade loan quality. Castro said that will not be allowed to happen. He explained that “Policies have fundamentally changed to create safeguards so that we can offer the opportunity to own a home to people who are ready and responsible to buy.”
Castro also said he believes the government has a role to play in serving low- to moderate-income borrowers and in providing a backstop for the securities market.
“We have to remember how we were able in the United States to build up the homeownership rate to where it is today,” he said. “FHA certainly played a significant role in that, and for our part at HUD, we hope it continues.” ##
(Photo Credit: Dallas Morning News)
Article Submitted by Sandra Lane to – Daily Business News- MHProNews.
