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FHA Foreclosure

What happens during a FHA foreclosure? A FHA foreclosure is something which takes place when a person can not continue to make payments on a FHA insured property.

During the Great Depression, the government realized just how hard people had it.  Their mortgages were becoming too unreasonable to pay, so the FHA (Federal Housing Administration) stepped in to regulate the insurance rates on the loans as well as to help regulate the mortgage terms on the loans, helping to insure those home loans so the banks didn't lose any more money.  The FHA began to purchase loans and to insure them, helping to stabilize the real estate market.  But then the FHA foreclosures began to occur a few decades later.

The FHA stepped in to help insure the mortgages of people who were not always able to afford a home, including those in poverty stricken areas and elderly people. By insuring these loans for the banks, many more people could own a home.

However, in the 1990s, the prices of home began to skyrocket and people who would not have been able to afford homes were suddenly granted loans and easy payment terms.  But when the real estate market began to fall and those variable interest rate loans began to increase, traditional and FHA foreclosures began to rise, leaving the FHA with homes they need to sell in order to reap some profit on the losses from the foreclosures.

What's interesting is that many studies have noted that FHA mortgages actually have a lower rate of foreclosure than traditional mortgages.  However, when people can not keep up with their house payments, then the house will have to go into foreclosure and the HUD will become the owner of the house.

In fact, those with subprime loans are the ones that more often go into foreclosure as they have fewer resources they can use in their hour of need.

What FHA insured home owners will want to do is to contact their lender first to see what options they have if they find that their mortgage is getting out of control.  While foreclosure may seem like the only option, there are other ways of getting one's debt and one's mortgage under control, even in a less than stable economy.

Forclosure doesn't have to be the answers to the problem. In fact, while many people are delinquent on their FHA VA insured home at some point, they avoid foreclosure and do not often go into foreclosure.  But if terms can not be worked out and the home owner simply can not keep up with the payments, the house will need to go into foreclosure.

Click here for more FHA foreclosure information.


  

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