Marc's Mortgage Matter's

THE subprime mortgage crisis has had at least one positive outcome: many unscrupulous professionals who steered unsophisticated borrowers into risky loans went out of business. 

Some of those people have since returned to the industry, lenders and mortgage brokers say, only this time they are involved in loans insured by the Federal Housing Administration, which are also often sought by less sophisticated borrowers.

Now the F.H.A. is tightening its review of mortgage professionals who are permitted to originate its loans. Some longtime F.H.A. mortgage brokers say the efforts will help spare borrowers some of the abuses of the subprime era.

Among other things, brokers who help originate F.H.A. mortgages will be required to obtain approval in advance from the federal Department of Housing and Urban Development, of which F.H.A. is a division. In the past, nonapproved brokers could refer applicants to approved lenders and charge the borrower a fee. Additionally, people convicted of making fraudulent loans cannot take part in the F.H.A. program. Previously, though companies were penalized by the F.H.A. for such behavior, the individuals responsible could simply switch employers.

William Apgar, the senior adviser to the secretary for mortgage finance at HUD, said that some of these individuals were probably among the roughly 1,500 new mortgage professionals who have obtained licenses to make F.H.A. loans in the last two years. (There are 13,500 in all, according to Mr. Apgar.)

“These folks know how to scam people,” he said, “and they’re now trying to scam people in a new way. But these guys haven’t just invaded F.H.A. They’re in every corner of the world.”  The new requirements for F.H.A. lenders, as well as more than $400 million in additional financing, partly for mortgage-fraud investigations, Mr. Apgar said, will help mitigate fraud among F.H.A. lenders.

F.H.A. loans are similar to subprime loans, because they are typically made to borrowers who have difficulty qualifying for prime loans — people with less money for down payments and those with damaged credit.

A frequent choice for first-time home buyers, F.H.A. loans carry competitive interest rates — late last week, for instance, the rate on a 30-year fixed-rate loan was 5.5 percent — but borrowers must pay a monthly insurance premium. (On a $400,000 loan, the insurance is $183 a month.)

Borrowers with low credit scores or low cash reserves rarely considered F.H.A. loans over the past decade, partly because of the insurance fees, but also because they could easily get other subprime mortgages with no or low down payments and with interest rates initially much lower than for F.H.A. mortgages.

The problem was that many of those loans were adjustable-rate mortgages, or ARMs, whose interest rates often spiked in the first few years. Now that these “exploding ARMs,” as they were known, have vanished, subprime borrowers are again flocking to F.H.A. loans.

Of the mortgages made in the past 12 months, about 20 percent have been F.H.A. loans, compared with about 2 percent in 2006, according to HUD.

Here is a guide to familiar real-estate ad phrases.

Charming - Tiny. Snow White might fit, but five of the dwarfs would have to find their own place. See "Cute," "Enchanting," and "Good Starter Home."
Much potential - Grim. Steer clear unless you have a lot of money and believe your blind dates re ally did have nice personalities. See "Ready to Rehab," and "Fixer Upper."
Unique city home - Used to be a warehouse.
Hi-tech/Contemporary - Lots of steel shelving with little holes - the kind your dad used to store tools on in the basement.
Daring design - Still a warehouse.
Completely updated - Avocado dishwasher and harvest gold carpeting or vice versa.
Sophisticated - Black walls and no windows. See "Architect's Delight."
One-Of-A-Kind - Ugly as sin.
Brilliant concept - Do you really need a two-story live oak in your 30-foot sky dome? See "Makes Dramatic Statement."
Upper bracket - If you have to ask . . .
You'll love it - No, you won't.
Must see to believe - An absolutely accurate statement ;/