Ben Eisen
speaker
1,467 appearances
35 recordings
1 series
first heard Jul 2017
last heard Nov 2024
Ben Eisen’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · Tapping Your Mortgage for Cash Faces New Restrictions · 2 Aug 2019
podcast
Now it's only 80%.
So it's a bit lower, which means you might not be able to take out as much cash if you have an FHA loan or are getting one.
Yeah, so this is basically a government program where already the borrowers are a bit riskier.
They have slightly lower credit scores.
They're often using down payment assistance programs to get money together for a down payment.
Their ratio of debt to their income is often higher.
So when you take all those risks together and then you add on this risk of higher cash out refi balances, the FHA basically decided that's a risk that we're not really willing to take anymore.
Right, exactly.
So when you think about a higher balance on your mortgage, it's not like that goes away if your home value goes down.
So if you have a mortgage equal to 85% of your property and property values drop 20%, all of a sudden you're underwater.
And that ramps up the risk a lot for you as a homeowner.
Yeah.
So when you think about loans backed by Fannie Mae or Freddie Mac, those are sort of conventional loans.
And those programs only allow cash outs up to 80% of your property value.
And that's what the FHA is doing here.
And it's sort of interesting in a way because what the FHA found is that a lot of people who had Fannie or Freddie loans were going into the FHA program to be able to take out loans.
that extra 5% of cash because they knew they could kind of take more cash out through the program.
So now that it's sort of level, some of that activity might go away is what the FHA says.
Exactly, yes.
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