The lender cannot redeem the residence if the borrower fails to cover the maintenance call as long as the borrower continues to make the mortgage payments. However, the lender can freeze the investment account and move its assets into more conservative investments such as Treasury bonds. Unless a family possesses a large portfolio and other assets that can be tapped in times of trouble, the stock market option may not be a good option for them. In fact, most low-income families are not likely to be able to utilize such an option. FHA's low down payment requirements and flexible underwriting standards allow lenders to assist millions of low-income families buy their first homes without worrying about the performance of their investments.
Home equity is the most important source of wealth for low-income and minority families.
FHA insured a record 1.3 million mortgages in 1999 as a result of the reforms instituted by HUD over the last several years such as Automated Underwriting, Homeownership Centers, Credit Watch and Appraisal Reform. The stock market boom and strong income and employment growth helped the nation reach a homeownership rate of 67.3 percent in the second quarter of the year 2000. Starter Kit to ensure that mortgagees have easy access to current handbooks and mortgagee letters. Paper copies of the FHA Starter Kit will no longer be provided, except for a limited number for small mortgage companies not currently online. Mortgagee letter 00-40, issued on November 3, explains the new process.