HUD: Government Involvement in the Housing and Loan Market
HUD or The United States Department of Housing and Urban Development is a department of the Federal government, represented in the Cabinet by the Sec. of Housing and Urban Development. The current Sec. of HUD is Shaun Donovan, serving under President Obama.
HUD is a big organization covering a myriad of topics including, single family housing, multi-family housing, government housing projects, mortgages, and rents. The HUD website contains a complete listing of HUD projects.
Why is HUD Important to Me?
HUD is important to you because it sets government policy and oversees key players in the housing and mortgage market, including the FHA (Federal Housing Authority). Since the housing the crisis of 2007, FHA backed (guaranteed) loans have become a central part of the mortgage market.
Here are some of the services that HUD provides:
HUD Mortgage Loan Programs: HUD loans are done through the FHA. FHA loans cover a wide variety of circumstances including purchase loans, refinance loans, purchase and renovation 203k loans, reverse mortgage loan, and special housing project loans.
In general, a FHA purchase loan has less strict underwriting requirements, including a low minimum credit score (580 – 620) and low down payment (only 3.5% of purchase price). All FHA loans require MIP, mortgage insurance premium. For more information read the Bills.com articles about FHA loans, FHA streamline refinance, and FHA refinance loans
Information and Counseling: The HUD maintains a Web Portal with extensive information about purchase, rent and mortgage. You can find detailed information about their various programs.
In addition, HUD has housing counselors, who give free counseling to prospective home purchases and mortgage takers. These counselors also help with borrowers who are struggling to make their payments and are looking for a loan modification or short sell program. Borrowers who are looking for a HECM (Home Equity Conversion Mortgage), otherwise referred to as a Reverse mortgage, are obligated to go through a HUD counselor in order to guarantee that they completely understand the ramifications of a reverse mortgage.
Community based and Special housing projects: HUD oversees many community based housing projects, Indian Reservation projects and Hawaiian Land projects, just to name a few. One of the goals of HUD is to provide reasonable and affordable housing for needy Americans.
Joint Participation in MHA (Making Home Affordable) Program: One of the major housing relating programs during the Obama Administration is the MHA program, which is overseen by HUD and the Treasury Dept. The MHA program includes special FHA programs such as the FHA streamline refinance, FHA HAMP (modification) or FHA HAFA (foreclosure alternative) program.
However, HUD has extended the program into the conventional loan market by including Fannie Mae and Freddie Mac based loans into the program. This includes the HARP refinance loan program, HAMP loan modification program and the HAFA foreclosure alternative program.
Do I Deal Directly with HUD?
Your direct dealings with HUD are for general information, learning and counseling purposes.
Neither HUD nor the FHA is direct lenders. In order for a HUD (or FHA) lender to offer a HUD (or FHA loan), it must carefully follow all HUD underwriting guidelines. Like any other mortgage loan, those guidelines are very technical. Read information from the Bills.com Web site, the HUD website, before you speak to your lenders. It is very important to prepare yourself properly before making a loan application.