Mortgage Backing For Previous Foreclosed Homeowners

     Obtaining a mortgage in today's market can be a difficult task for some people. Credit scores are the focal point for mostly all lenders and it is causing many people to be rejected as the lenders are requiring a score of approximately 640 for an FHA loan and 740 for a conventional loan. In the case of people affected by the housing market crash and forced into foreclosure, the feat of obtaining a mortgage may seem impossible. NOT ANYMORE! The Federal Housing Administration (FHA) is giving some former home owners a second chance at home ownership. The FHA has sent a letter to mortgage lenders saying that they will offer mortgage insurance to homeowners that once filed for bankruptcy or homeowners that lost their homes through short a short sale of foreclosure during the economic recession. This is great news for many people whose credit scores were ruined by the housing crash.

"FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage," according to the letter FHA sent to lenders.

     This does NOT mean that every single person who was foreclosed upon will receive this mortgage backing from the FHA. If you are someone who fits into this category, you will still be obligated to meet all other FHA requirements and the FHA needs to see proof that you are no longer financially constrained. In other words, it will not be a free-for-all as it was in the beginning of the housing bubble where mortgages were handed out regardless of your financial situation. Potential buyers that were once foreclosed upon need to show proof that they are financially able to afford the amount they are being lent. These borrowers will also have to take part in housing counseling and the FHA is requiring all lenders to make sure at least a year has passed since the foreclosure or bankruptcy occurred. 

Energy Efficient Home Could Lead To Bigger Mortgage

One of the biggest considerations when it comes to mostly anything now-a-days is the environment. Energy efficiency is becoming more and more relevant and it is now encroaching on the mortgage industry. Energy efficient homes are homes that have additions such as solar panels or high efficiency appliances in order to save energy costs for the home. A new bipartisan bill in the Senate is proposing that home buyers who purchase energy efficient homes should qualify for a higher amount with their mortgage. This new act, which is labeled the SAVE ACT, would allow lenders to factor in energy savings to the value of a home.

"It's about energy efficiency, it's about savings, it's about increasing the borrowing power for the borrower. I think it's a win-win for the industry," said Sen. Johnny Isakson, R-Ga., a co-sponsor of the bill.

If approved, any lender with loans backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration (which accounts for approximately 90% of the market) would account for expected energy cost savings. Another aspect the bill would affect is appraisals. The bill would require lenders to add the value of expected energy savings into the value of the home being appraised.