FHA loans have been accounting for over 30% of home loans for a
long time. These loans offered a 3% down payment that was very
attractive except for the years prior to the real estate financial bust in
2008-2009, when you could borrow anything while having any job
whether you intended to pay it back or not. Once lending became
scarce the FHA became a preferred loan. A few years ago the 3% down
payment became 3.5% but no one cared because it was still the best
Bank of America last year got penalized to the tune of $800 million
for errors while dealing with FHA. They were not alone. BofA announced
this week that they are starting a new 3% down payment
mortgage program without the dreaded FHA private mortgage premium.
This promises to be a hit in the market place. They are avoiding the
backing of FHA by using Freddie Mac and Self Help Ventures Fund, a
non-profit, from Durham, NC. I do not know what the real motive was
to create this program but it will be a big boost for Durham and for
home buyers everywhere.