The “FHA Manufactured Housing Loan Modernization Act of 2007” was passed by the House and will update the Title 1 program of FHA, allowing more Americans to achieve the dream of homeownership.  The bill would increase the loan limits for manufactured homes and remove disincentives that have prevented the secondary market from investing in manufactured home loans.  There is currently no companion bill in the Senate.

Federal banking regulators have called on subprime lenders to adopt tighter underwriting standards and better consumer protection practices in the face of rising mortgage delinquencies across the country.

For example, banks should verify the income of all subprime borrowers, provide clear and balanced information on the risks and benefits of each loan, and work with home owners who are at risk of defaulting.

In addition, the agencies – which include the Federal Reserve, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the National Credit Union Administration – said lenders should develop strong control systems to make sure their new standards are being met.

The median price of an existing single-family home in California increased 4.8 percent in May and sales decreased 25 percent compared with the same period a year ago, according to a report by the CALIFORNIA ASSOCIATION OF REALTORS®.

In response to the increased number of residential foreclosures and short sales in California, C.A.R. recently released “Foreclosures: C.A.R.’s Comprehensive Guide,” an informative publication designed to equip REALTORS® with the knowledge and skills to assist clients in foreclosure situations.  The brand new publication discussed REALTORS® responsibilities when assisting seller with distressed properties and short sales, helping buyers interested in purchasing property in foreclosure, and working with lenders and bank-owned properties (REOs).

Mortgages with “Payment Shock”:

• 2/28 and 3/27 Mortgages.  A 2/28 or 3/27 adjustable rate mortgage gives the borrower a fixed payment for the initial two- or three-year period before adjusting the mortgage up as often as every six months.  After the initial “teaser rate” period, your mortgage payments typically adjust up every six months.
• Interest-Only Mortgages.  An interest-only mortgage lets you pay only the interest on the loan for the first 5 or 10 years and nothing to pay off the loan amount (principal).  After the interest-only period, the mortgage requires much higher payments covering both interest and principal that must be repaid over the remaining years of the loan.
• Payment Option Adjustable Rate Mortgages. Payment option mortgages let the borrower decide how much to pay each month.  You can even pay less than the interest, and add the unpaid interest to the total mount of principal you owe.  Or you can pay just the interest or an amount sufficient to pay off the loan in 15 to 30 years.  These mortgages can have an especially big payment shock.

Look to see if your mortgage has any of the following features:

• A “teaser rate” or “no interest” period that expires and leads to a big jump in your monthly payment.
• An option to pay less than the full interest due in any given month.  Taking that option makes the amount you owe go up instead of down, since the interest you don’t pay is added to your loan balance.
• An adjustable interest rate with very high or no limits on the amount your payment can go up.
• A payment that doesn’t include an amount for paying property taxes and homeowners insurance.  This mean you may be hit with big bills you did not expect.