Ever since the mortgage industry stopped making loans for anyone with less than a 20%down payment and nearly perfect credit, "the only game in town" for first time buyers has been FHA. What we in the industry are seeing is a 45 to 60 day backup on processing as these loans are becoming more popular. And why not? 3% down, a fixed rate thirty year mortgage, with a current maximum loan amount of around $729,000...at least in California. Sounds pretty good.
Their loan volume has tripled in the last year alone, and now Congress wants to have them handle almost all the loans about to be foreclosed upon, refinancing these unaffordable loans.
The difficulty is that they have neither the funds nor the staff to handle this amount of new business, and these will both be slow in coming.
Right now, they are trying to insure 140,000 new loans every month, with a staff of under a thousand people nationally.
If this situation is not remedied soon, we may be reading about an FHA bailout next year.
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