If one looks over the recent SIGTARP report, the U.S. government is now propping up and owns the entire residential real estate market.
Today we have another damning statistic via this Washington Post article, Rising FHA default rate foreshadows a crush of foreclosures.
9.1% of FHA loans missed 3 mortgage payments by December 2009.
Seems the problem is loans made in 2007, 2008. But by this time, the U.S. was well into a housing collapse, so the subprime lending was curtailed...but guess what, we have another sucker, the FHA.
FHA Commissioner David H. Stevens, who joined the agency in July, flagged his agency's troubles with the 2007 and 2008 loans in October, when he told a House panel that "rogue players on the margin" immediately migrated to the world of FHA lending after the subprime mortgage market collapsed.
Their aggressive lending tactics attracted borrowers with unusually poor credit profiles to the FHA. "That clearly impacted the books of business in 2007 and 2008, and that performance data is showing up very clearly in today's balance sheet," Stevens said at the time.
Talk about a lack of common sense. If one doesn't have income to make the payments, it's probably not a good idea to lend them the money to buy a home.
a now-defunct FHA program that enabled sellers to cover the down payments of buyers. This meant many borrowers had no skin in the game and were more likely to walk away at early signs of trouble. The program resulted in excessive defaults before it was ended in late 2008, and it is projected to cost FHA an additional $10.5 billion in losses.
Here is the shocker! 25% of all FHA loans from 2007 are bad! The FHA is projecting the same rate for all loans made in 2008.
The FHA projects that it will pay out claims to lenders on one out of every four loans made in 2007 -- the worst rate in at least three decades. The claim rate should be nearly the same on the vastly larger volume of loans made in 2008.
The article then goes on further about credit scores, claiming lending requirements have tightened. A FICO of 690 vs. 630 is more common for 2009.
Are these people stuck on stupid or what? Try income verification as your criteria.
While the FHA claims 2009 will be better, we have another expert disagreeing.
Ann Schnare, a former Freddie Mac official, said the situation could be even worse. She said the audit underestimates future losses because it does not take into account all loans that are now overdue, only those that the FHA has paid claims on.
Why, why, why can we not get a government focused on the real root issue here? Americans need good paying, stable jobs from which all else flows.
Today the FHA instead enabled house flippers.