Federal Housing Administration (FHA) Foreclosure Assistance And Help

 

The FHA was established to improve and ensure the standard of living for homeowners. The FHA assists both borrower and lender alike with several different types of help, such as insuring mortgages and stabilizing the mortgage industry.

The FHA is the Federal Housing Administration which is a part of the United States government agency. It was created as a part of the National Housing Act. The main goals of this agency are to: improve living standards; insurance of mortgage loans; and to stabilize the mortgage market. These initiatives have helped the citizens from being mortgaged out of their own homes.

This agency is completely self funded and has insured more than 34 million home mortgages as the statistics say.  The FHA offers mortgage insurance on loans made by lenders. These lenders are generally those approved by the FHA.  It insures the mortgages on homes and hospitals irrespective of the ownership as long as the credits of the mortgagor are satisfactory


How the FHA Helps

The FHA mainly helps in securing the loan process as a whole. They decide the details of the loan; if the lender is credible and if the borrower can meet the requirements etc. FHA offers this as an insurance called the FHA mortgage insurance.

This helps in promoting the interests of the lenders in case the borrower tends to default. The FHA will pay the lender directly in this case and the borrower will now have to deal with the FHA directly in order to face foreclosure.

The FHA insurance checks the borrower for his ability to pay off the loan; by means of asset or monthly insurance interests which the borrower has to pay. The household income and payment ratios are calculated before offering the insurance to the borrower.  The borrower has a credit score associated with him which is directly proportional to the percentage of loan which needs to be invested by the homeowner. 


How the FHA Loan Works

The FHA loan offers the homeowner to buy a home after assessing these criteria. The homeowner needs to pay monthly mortgage insurance for a period of about 5 years. The loan needs to pay down to 78% of its value.

Hence the borrower pays accordingly. In case of a default from the borrower, the lender immediately approaches the FHA. The FHA pays almost 97% of the loan to the lender and offers the remaining 3% after the home is sold off or once the down payment of the home is received.

This insures the lender against a huge loss in case of a default. The borrower on the other hand has to pay the down payment of 3%. This can be paid using the personal cash of the borrower.

The cash can also be paid as a gift by some family member or employer or the labor union. At times government entities and certain non-profit organizations can step in to protect the interests of the borrower. FHA has certain grants for the down payment. These are generally collected from the seller funded programs, federal government programs, Grant America programs etc.

The FHA sells the home to prospective buyers and pays off the borrower the remaining amount in a month or two. Hence this maintains a regulated secure transaction all the time.

The FHA helps the buyer and lender in several stages. It assists in granting a loan to the buyer. It helps in securing the interest of the lender. The next stage involves the down payment assistance, which is easily available in FHA loan system. Finally it helps in the refinancing of the mortgage secured using a FHA loan program.

Resources:

http://www.fha.com/
http://www.hud.gov/offices/hsg/
http://www.fhainfo.com/