Recovery Of Housing Market And Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On Recovery Of Housing Market And Mortgage Guidelines Was UPDATED On November 7th, 2019

Many of us remember the good old days of easy financing starting in the 90’s until the real estate and mortgage meltdown of 2008 .

  • The Great Recession of 2008 hit everyone
  • Never in history since the Great Depression has so many Americans been affected by the real estate crash
  • Many Americans, including myself, always thought that real estate was the safest investment
  • Many Americans invested in real estate even though they were not professional real estate investors

In this article, we will cover and discuss the recovery of the U.S. housing markets.

End Of Sub-Prime LoansRecovery Of Housing Market

Real estate was the favorite investment for all hard working Americans.

  • Some folks had two, three, four homes besides their owner occupant homes and enjoyed the positive cash flow they got from their rental income
  • Financing was extremely streamlined and easy
  • Almost anyone could get a mortgage on not just an owner occupant property but also on second homes, third homes and investment properties
  • Sub-Prime Lending was the name of the game when it came to mortgages where no docs and stated income loans was the ticket for easy fast financing
  • Bank Statement Loans were one of the most popular loan programs out there for home buyers and real estate investors
  • Washington Mutual and Countrywide Loans were two household names when it came to mortgages
  • This was because they were the two largest sub-prime lenders in the nation
  • Then the 2008 Real Estate and Mortgage Crash happened

It literally affected every American family in the United States and their loved ones.

Real Estate & Mortgage Meltdown Of 2008

The Real Estate & Mortgage Meltdown Of 2008 affected millions of Americans.

  • There is not a city, county, state that was not affected by the 2008 Real Estate and Mortgage Meltdown of 2008
  • Bankruptcy rates hit historical highs
  • Foreclosure of homes went through the roof and never in history were foreclosure numbers as high as they were
  • The whole country was in panic alert
  • Millions of American homeowners saw the equity in their homes evaporate
  • Hundreds of millions of homeowners had homes with mortgage balances that were higher than the value of their homes

How 2008 Real Estate Crash Affect Seniors

People who retired and counted on their home equity as part of their retirement were forced back to go to work:

  • Many just taking job offers that just paid minimum wage
  • Millions of workers were laid off, lost their jobs, or demoted to lower paying positions
  • This was because their employers were also affected by the economic downturn
  • The real estate and lending industries came to an abrupt halt
  • Many full time realtors were forced to take on other jobs to make ends meet
  • Mortgage loan officers could not make ends meet

This was because the whole lending industry came to an abrupt halt.

Mortgage Lending Guidelines And Changes

Many mom and pop mortgage broker shops were forced to close their doors:

  • This was because they could not pay their minimum monthly expenses and licensing fees
  • Mortgage giants Washington Mutual and Countrywide Loans shut their doors
  • The entire sub prime lending market collapsed
  • Hundreds of thousands of mortgage loan originators were left without job
  • Either had to seek employment at other fields or seek menial positions where they were overqualified for the position with their current employers
  • Many American workers still did not recover with the recovery of housing market
  • They are either still unemployed or working on jobs where they are overqualified for
  • Many business owners lost their businesses while other business owners had to completely change their business model

Life was never the same to many after the Real Estate and Mortgage Crash of 2008.

The Long Recovery Of Housing MarketWhat was Real Estate & Mortgage Meltdown Of 2008

Millions of homeowners who underwater mortgages:

  • This was due to the major drop of their home’s market value
  • They had mortgage balances that were higher than the value of their property values
  • They never thought that there would be a recovery of housing market
  • These homeowners with upside down mortgages thought that they would be stuck in their homes forever
  • This was because of the huge drop of their home’s market values
  • Fortunately, the process of the recovery of housing market start in 2010 and kept on recovering
  • Many parts of the country, home prices appreciated faster than expected

Many parts of Florida and California, recovery of housing market appreciated double digits each year starting 2012.

Qualifying For Mortgage And Recovery Of Housing Market

The United States Department Of Housing And Urban Development, also known as HUD, is the parent of VFHA. FHA is the Federal Housing Administration.

  • HUD realizes that the housing market in the U.S. needed help with the depressed housing market
  • So it went to work in making financing easier
  • HUD was looking for ways of stimulating home ownership by making lending easier so home buyers can qualify for FHA Loans and become homeowners instead of renters
  • HUD went to work in setting new policies and programs where HUD would insure FHA Loans originated and funded by lenders

FHA set minimum lending guidelines where it was easy for any home buyer to qualify.

HUD Agency Guidelines On FHA Mortgages After Recovery Of Housing Market

Here are the minimum FHA Lending Requirements:

  • 580 FICO credit scores for 3.5% down payment home purchase loan
  • Borrowers do not have to pay outstanding collection accounts and charge offs
  • Borrowers can qualify for FHA LOAN after bankruptcy and foreclosure as long as they met a minimum mandatory waiting period
  • 2 Year Waiting period after Chapter 7 Bankruptcy discharged date

VA And FHA Mortgage Guidelines On Chapter 13 Bankruptcy

VA and FHA has no waiting period after Chapter 13 Bankruptcy discharged date as long as it is manual underwriting:

  • Borrowers one year into a Chapter 13 Bankruptcy repayment plan can qualify for VA and FHA Loans
  • Need Chapter 13 Bankruptcy Trustee Approval and manual underwriting
  • 3 Year waiting period after the recorded date of foreclosure and/or deed in lieu of foreclosure on FHA Loans
  • 3 Year waiting period after a short sale date to qualify for FHA Loans
  • 2 year waiting period after Chapter 7 bankruptcy, short sale, foreclosure on VA Loans
  • The rules and regulations set by HUD for FHA
  • FANNIE MAE AND/OR FREDDIE MAC is in charge of Conventional Loans
  • VA LOANS is under the U.S. Department of Veterans Affairs
  • USDA is under U.S. Department of Agriculture Rural Development
  • Government Agencies became very lax because these government agencies were directed to promote home ownership
  • Due to the strong emphasis on promoting home ownership, the recovery of housing market started to recover faster than expected
  • Home values spiked where it has appreciated double digits in many areas of the United States

Statistics per the United States Census Reports, average housing prices in the United States was $281,000.

Down Payment And Closing Costs Requirements On Home PurchasesWhat are Mortgage Lending Guidelines And Changes

Demand of new homes has gone up throughout the United States and the right hand rule is that as long as a consumer has documented income, they can purchase a home with very little down payment.

  • Home buyers can purchase a new home with only 3.5% down payment with FHA Loans
  • Do not have to worry about closing costs
  • This is because closing costs can be covered by a sellers concession by the home seller of lender credit by the lender
  • FHA permits that the down payment can be gifted by a relative of the home buyer
  • VA Mortgages and USDA Mortgages do not require down payment
  • Home buyers of VA Loans or USDA Loans do not have to worry about closing costs
  • This is because closing costs can be covered by sellers concessions and/or lender credit

Fannie Mae and/or Freddie Mac permits down payment on a home purchase to be gifted.

Introduction Of NON-QM Loans And Bank Statement Loans

Gustan Cho Associates is a national mortgage company licensed in multiple states with no overlays on government and conforming loans. We created and launched our non-QM loans and bank statement loan program for self employed borrowers. Self employed borrowers can qualify for non-QM loans with no income tax returns. 12 or 24 months bank statements are averaged and used for income. NON-QM Loans have no waiting period requirements after housing event and/or bankruptcy. 10% to 20% down payment requirement. Down payment depends on credit scores. Borrowers can qualify for non-QM loans down to 500 credit scores. Gustan Cho Associates also has 5% down payment Jumbo Loans with no mortgage insurance.

Mortgage Borrowers interested in qualifying for a home loan, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at

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