FHA: The Next Housing Bubble? Lawmakers Worry Agency Is Creating Another Boom

latimes.com:

Reporting from Washington - In the wake of the mortgage meltdown, the Federal Housing Administration has emerged as a pillar of the still wobbly housing market -- providing vital insurance that enables borrowers to qualify for loans with as little as 3.5% down.

This year alone the agency has backed nearly 2 million mortgages worth at least $328 billion. It insured 21.5% of all new mortgages last year, up from fewer than 6% in 2007.

Read the whole story: latimes.com

Comments

[Gernuser]

Congratulations to to Obama for winning the Nobel Peace Prize

If you like finance & econ news you'll like: http://pie.im/af30

Obama needs to carry out actual heath care & financial reform. Needs to get things done instead of just talking and planning.

[RomeoMD25]

why after all this big gov't with all these social programs why is the standard of living in the US diminishing.
When we were in a real free market economy with low taxes , the husband usually was the breadwinner and the woman traditionally was a stay home mom and everything was fine; NOW, with all this gov't sponsored subsidities, medicare, medicaid, the US household can't make it even make it on two incomes.  Gov't can keep their "solution" along with monetary INFLATION

[mcmutter]

The median wages earned in this country are too low. The media house prices are to high.

[Gernuser]

More work needs ot be done

Good articles: http://pie.im/af30

[MyTalkRadiou]

Obama needs to do actual reform instead of just talk & plan

good articles: http://br.st/tU

~~

[sabela]

Okay, I am a FHA mortgage holder and the only thing I will lose if I am unemployed is the car (I tried to help someone, co-signed on a loan and now have a car payment that is too high). I made a point of purchasing a home I could actually afford if I had the misfortune to end up on unemployment. I didn't buy my home for an investment. I didn't buy my home when prices were inflated. This is my home. I will fight with everything I have to keep it. I really hope that most FHA homeowners feel the same way as I do. BTW, my house is still worth more than I paid for it.

[sueinmn]

I agree BUT what happens when your unemployment runs out as it has for many and many more to come. You lose all you worked for. This isnt fair. im in your situation somewhat also. Havent touched the savings yet but will need to. Cant draw on my pension yet and must be behind to draw my 401k. Then your credit is already tarnished by then.

I tried to loan modify earlier with WF to no avail. Did get an FHA outside of any WF belittling help.

[grateful4thedead]

Please, let me make this perfectly clear: FHA WILL implode. not maybe. not probably. it WILL implode.
I'm not commenting on the politics of it and all of that.

I'm just talking basic numbers.

FHA will implode.

[jennylynn]

You are Sooooo Correct. Let's hope the decision makers will realize this , too.

[Bee]

If you read the article, it says that FHA is self-sufficient and doing fine so far, and has not asked for any bailouts. They ARE thinking about raising the credit score limits though to PREVENT possible losses.

[MarsAmbassador]

Here we go again. Second verse same as the first. Except this time there won't be any taxpayer funded bailout and the entire financial system will collapse as a result. Way to go.

[jsarets]

There has to be a taxpayer bailout of the FHA. That's the whole point of the FHA.

They guarantee whoever buys their bonds that they will receive their payments in full even if the loans default, using taxpayer money if need be.

There are very few debt instruments that carry no credit risk whatsoever, and the two most prevalent are Treasury bonds and FHA bonds.

[MarsAmbassador]

Taxpayers will burn Washington to the ground before they sit by and watch another massive bailout get dumped in the hands of these incompetent financial wizards who keep putting us in mess after mess. Americans will not stand for it.

[robinhood1]

A 3.5% down payment doesn't even cover all the fees associated with real estate transactions. Why isn't the down payment requirement 10% or 20%? I guess the taxpayers will be funding another bailout soon.

[janehenry]

How many working families can afford 10-20% down? Is homeownership only for the wealthy? Apparently to you and those that think like you it is.

[dnpvd51]

Wrong. Wrong. Wrong.

Easy credit terms raise the price of houses and lower down payments also raise the price of houses.

And if you cannot afford a down payment on a correctly priced house, then you cannot afford the house.

But with the relaxed credit standards and lower down payments, nobody can afford the 20% down payment because the houses are too high priced.

[ignrnthllblly]

BULLSHIRT! More Republican smoke and mirrors to justify more corporate welfare. The symptoms AIN'T the disease. In a viable real estate market, FHA foreclosures have been low historically--and the spike now obviously follows the destruction of the market by the suicidal tendencies of conventional (and sub-prime) lenders. People aren't giving up their homes because they have so little to lose, but because of what they have already lost: JOBS. If FHA's stability is being threatened (and that assertion should be examined very carefully), it's because of Congressional stupidity in casting aside local market purchase limits to make FHA the better option for people the program was never designed to assist. If Congress raises the minimum payment for an FHA-insured loan, the punishment dealt to lower-income families will be the price for steering middle-class borrowers back to conventional 95% lenders. And make no mistake: the protection of those lenders is the real intent here.

[Peter007]

Let's remember that the current crisis was caused by a credit crunch in late 2008 which froze the credit markets. Without credit, real estate values drop 90%. Your $300,000 house becomes a $30,000 house without credit. . The FHA was a tool used to get mortgage money back into the system when values were falling. Most people lost between 10% to 50% of their equity. The FHA allowed those people that went from 20% equity in their houses down to 5% equity, the ability to refinance their high interest loan into a low interest rate fixed loan. It stopped foreclosures and stabilized the market....... Lending is about risk. If a house goes from $200,000 to $500,000 in 24 months, is that a risky investment? Or....if a house goes from $500,000 down to $300,000. Is that less risky ? I say the later.

[Nelson Jacobsen]

Look no further the your Government.
This is the single reason foreclosure are not happening. Take the property get the bill from the association. Until that time the 80 percent that are paying are having to make up the difference with a Special Assessment or your trash wont be picked up or have insurance that is actually is full replacement value. Let alone reserves, or simple repairs.

Reminds me of a real funny story how a storm destroys your asset and insurance is not enough or community didn't pay it and you now have no home, no assets, your mortgage, you assessment and now a special assessment which is consider debt to you. Game Over. BTW these communities get no FEMA Aid to stick the final nail in their collective eye.

These community are in fact private non-stock corporations where condo, coop townhouse of single family homes. And, they are a company that is broke and they are not going to get a loan from any bank cuz the GOV is bankrupting them by not paying their share while in ownership of property and acts of omission and some times Fraud. Do you think they are giving the correct documents, budgets, and financial statements of these communities that they are unloading now back on home buyers. What's your State's laws say about disclosure?

[AndyAdams53]

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)