Monday, May 26, 2008
My Day at the FHA; part 1
Rapid changes in the financing markets have me thinking quite a bit lately. Last week a lender advised a client that if she wanted a loft downtown, she should check a list of FHA Approved Condominium projects in St. Louis FHA%20approved%20St.%20Louis%20Condos.pdf
"FHA loans" are really bank loans that are insured by the federal government. They were created in the great depression as a way to encourage home ownership by those unable to make the substantial downpayment required to own a home (providing 97% loan to value (LTV) instead of 80% loans to value). For about the past 8 years, FHA loans were nearly obsolete with the availability of "piggyback" loans that allowed for two loans equaling 100% of the purchase price. Due to the corrections going on each day in the lending markets, the Federal Housing Administration estimates that the percentage share in the market of FHA loans will jump from 2% in 2007 to 48% in 2008.
With conventional lenders pulling most loan products off the shelf and the federal government anticipating the increase in FHA loans, one interested in downtown real estate may wonder why only 1 Loft building is FHA approved and what can be done about it.
That information to follow.