Reviewing 2012: The mortgage industry highlights

In 2012, there were various developments in the mortgage industry which had some positive and negative impacts on the common people. Let’s take a look at the highlights of mortgage industry in the year which is about to pass off:

• HHA program to help many people: HHA program, also knows as the Hardest Hit Alabama program was mainly aimed at preventing foreclosure and was started by Governor Robert Bentley. Its main aim was to help those homeowners who were unable to get back to their jobs after the April 2011 tornadoes.
• FHA to get $1 billion: As a part of the $25 billion mortgage settlement plan by the Obama Government, FHA had received around $1 billion. Apart from getting this help, FHA was allowed to raise premiums on insured loans. The main aim was to let it strengthen its reserves.
• New FHA rule makes getting loans difficult: In the month of April, 2012, FHA brought some changes in its criteria for giving loans. Under the new rule, it was said that FHA may not give loans to people who have delinquent collection accounts or disputed accounts with a total of $1,000 or more on their credit reports.
  
• Second mortgage deductions may not be allowed: In May 2012, it was announced that many mortgage experts wanted to eliminate the mortgage interest deductions for second homes or vacation homes. At that time, mortgage experts also opined that mortgage interest deductions on primary homes should also be regulated.
• FHA may reconsider strict condo mortgage rules: The main aim of FHA loans is to help the borrowers to get loans at low cost and comparatively easy terms. FHA lived up to it when it announced in May 2012 that it is bringing some changes in it’s condo rules which will make it easier for the condo owners to get FHA loans.
• Regulating mortgage industry of California: The Democrats of California had come up with a new plan to regulate the mortgage industry of the state in June, 2012. They wanted to ban dual track foreclosures, single point of contact for borrowers, right to sue lenders, increase penalties for lenders, etc.
• FHA withdraws tough rules to help borrowers: FHA, on July 2012, decided to withdraw new tough rules which were about to take effect on and from July, 2012. If these new rules would have come into affect, then it would have made things difficult for many borrowers.
• New mortgage disclosure rules proposed: The Consumer Bureau proposed new mortgage disclosure rules in July, 2012 which included 2 main points – the loan estimate and the closing disclosure.
• Appraisal rules made strict for risky mortgages: New appraisal rules were proposed by the Federal Reserve and the Consumer Financial Protection Bureau. The risky mortgages should be reviewed by certified appraisers. There should be a written inspection and the consumer should be given a free copy of the appraisal.
• New rules that make difficulty for borrowers to get a loan: The regulators are planning to introduce two rules which might take effect in January, 2013. The main aim of these rules is lower non-abusive lending. The rules may make it mandatory for the banks to hold a slice of risky mortgages on their books.
• New underwater loan relief program has disadvantages: The new underwater loan relief program came into effect from 1st of November, 2012. It may have a negative impact on credit scores. The lender may ask borrowers to sign promissory notes or make upfront contributions.
• Mortgage relief tax break to expire: 31st December, 2012 is the expiry date of the Mortgage Debt Relief Act of 2007. The Congress has been urged to save it and extend it for the time being. Under this Act, the borrowers had the option of avoiding tax payments for forgiven debts.
• Fiscal cliff may have a negative impact on housing market: The discussion pertaining to fiscal cliff has affected all. The uncertainty regarding the whole thing might affect the new home sale in the coming months. Unless the situation gets resolved, people may avoid taking any major financial decision.

The above mentioned points contain the major happenings in 2012 when we speak of the mortgage industry. Overall, the year 2012 was a mixed bag for mortgage professionals and the borrowers.