FHA Shortfall Seen at $54 Billion

[Patranus]

Oct. 8 (Bloomberg) -- The Federal Housing Administration, which insures mortgages with low down payments, may require a U.S. bailout because it has $54 billion more in losses than it can withstand, a former Fannie Mae executive said.

?It appears destined for a taxpayer bailout in the next 24 to 36 months,? consultant Edward Pinto said in testimony prepared for a House committee hearing in Washington today. Pinto was the chief credit officer from 1987 to 1989 for Fannie Mae, the mortgage-finance company that is now government-run.

http://www.bloomberg.com/apps/...01087&sid=aOmu318hOZr4

What do ya know, another program designed to help people buy houses that shouldn't be buying houses in the first place is going bankrupt. Thanks government!

Fannie Mae - bankrupt - thanks government
Freddie Mac - bankrupt - thanks government
Medicare - bankrupt - thanks government
FDIC - bankrupt - thanks government
Post Office - bankrupt - thanks government
Social Security - bankrupt - thanks government

 

[JSt0rm]

I think people need to understand that sometimes renting makes sense.

 

[b0mbrman]

Originally posted by: Patranus

What do ya know, another program designed to help people buy houses that shouldn't be buying houses in the first place is going bankrupt. Thanks government!

Yes.

"What do ya know, another program designed [in the 1930s] to help [tens of millions of] people buy houses that shouldn't be buying houses in the first place is going bankrupt [after operating deficit neutral for 75 years]. Thanks government!"

But, generally I agree. Our laws do too much to skew us toward home ownership, and buyers at every level take on more house than they "should."

Would you also be in favor of ending the mortgage interest deduction?

 

[Fear No Evil]

Originally posted by: b0mbrman

Originally posted by: Patranus

What do ya know, another program designed to help people buy houses that shouldn't be buying houses in the first place is going bankrupt. Thanks government!

Yes.

"What do ya know, another program designed [in the 1930s] to help [tens of millions of] people buy houses that shouldn't be buying houses in the first place is going bankrupt [after operating deficit neutral for 75 years]. Thanks government!"

But, generally I agree. Our laws do too much to skew us toward home ownership, and buyers at every level take on more house than they "should."

Would you also be in favor of ending the mortgage interest deduction?

I'd support ending the mortage interest deduction if we eliminate the deduction for children. The MID is about the only thing I can deduct as a married person without children. I pay CONSIDERABLY more in taxes than people with children who cost society MUCH more than me and my wife do.

 

[b0mbrman]

Originally posted by: Fear No Evil

Originally posted by: b0mbrman

Originally posted by: Patranus

What do ya know, another program designed to help people buy houses that shouldn't be buying houses in the first place is going bankrupt. Thanks government!

Yes.

"What do ya know, another program designed [in the 1930s] to help [tens of millions of] people buy houses that shouldn't be buying houses in the first place is going bankrupt [after operating deficit neutral for 75 years]. Thanks government!"

But, generally I agree. Our laws do too much to skew us toward home ownership, and buyers at every level take on more house than they "should."

Would you also be in favor of ending the mortgage interest deduction?

I'd support ending the mortage interest deduction if we eliminate the deduction for children. The MID is about the only thing I can deduct as a married person without children. I pay CONSIDERABLY more in taxes than people with children who cost society MUCH more than me and my wife do.

I'm sure it's not the only thing...property tax

Anyhow, would you say the tax benefits factored into your calculations at all?

 

[Fear No Evil]

Originally posted by: b0mbrman

Originally posted by: Fear No Evil

Originally posted by: b0mbrman

Originally posted by: Patranus

What do ya know, another program designed to help people buy houses that shouldn't be buying houses in the first place is going bankrupt. Thanks government!

Yes.

"What do ya know, another program designed [in the 1930s] to help [tens of millions of] people buy houses that shouldn't be buying houses in the first place is going bankrupt [after operating deficit neutral for 75 years]. Thanks government!"

But, generally I agree. Our laws do too much to skew us toward home ownership, and buyers at every level take on more house than they "should."

Would you also be in favor of ending the mortgage interest deduction?

I'd support ending the mortage interest deduction if we eliminate the deduction for children. The MID is about the only thing I can deduct as a married person without children. I pay CONSIDERABLY more in taxes than people with children who cost society MUCH more than me and my wife do.

I'm sure it's not the only thing...property tax

Anyhow, would you say the tax benefits factored into your calculations at all?

Oh, sure. I can deduct property taxes. Of which about 75% goes to the public schools. Let me count the # of children I have.. Oh, thats right.. ZERO.

 

[b0mbrman]

Originally posted by: Fear No Evil

Originally posted by: b0mbrman

Originally posted by: Fear No Evil

Originally posted by: b0mbrman

Originally posted by: Patranus

What do ya know, another program designed to help people buy houses that shouldn't be buying houses in the first place is going bankrupt. Thanks government!

Yes.

"What do ya know, another program designed [in the 1930s] to help [tens of millions of] people buy houses that shouldn't be buying houses in the first place is going bankrupt [after operating deficit neutral for 75 years]. Thanks government!"

But, generally I agree. Our laws do too much to skew us toward home ownership, and buyers at every level take on more house than they "should."

Would you also be in favor of ending the mortgage interest deduction?

I'd support ending the mortage interest deduction if we eliminate the deduction for children. The MID is about the only thing I can deduct as a married person without children. I pay CONSIDERABLY more in taxes than people with children who cost society MUCH more than me and my wife do.

I'm sure it's not the only thing...property tax

Anyhow, would you say the tax benefits factored into your calculations at all?

Oh, sure. I can deduct property taxes. Of which about 75% goes to the public schools. Let me count the # of children I have.. Oh, thats right.. ZERO.

Heh. I pay even higher property taxes (Grrr...Texas....) and have even less kids...

 

[3chordcharlie]

Originally posted by: Fear No Evil

Originally posted by: b0mbrman

Originally posted by: Patranus

What do ya know, another program designed to help people buy houses that shouldn't be buying houses in the first place is going bankrupt. Thanks government!

Yes.

"What do ya know, another program designed [in the 1930s] to help [tens of millions of] people buy houses that shouldn't be buying houses in the first place is going bankrupt [after operating deficit neutral for 75 years]. Thanks government!"

But, generally I agree. Our laws do too much to skew us toward home ownership, and buyers at every level take on more house than they "should."

Would you also be in favor of ending the mortgage interest deduction?

I'd support ending the mortage interest deduction if we eliminate the deduction for children. The MID is about the only thing I can deduct as a married person without children. I pay CONSIDERABLY more in taxes than people with children who cost society MUCH more than me and my wife do.

They wouldn't need those deductions for their kids if the fvcking nanny state would let 6 year olds go get their own jobs like they're supposed to!

 

[waggy]

the FHA has many types of loans packages. its not just to help the lower income people but also first time home buyers etc. the only loan i really know anything about you still need to qualify for the loan you just get interest rates of 1-4% but have ot buy a home in a urban setting (small growing towns) and be a first time homebuyer.

But yes they give to many many loans to unqualifed people.

 

[Vic]

It must be difficult being a reactionary... stuck always chasing your own tail mentally. You've never able to understand what's going on.

FHA underwriting standards are among the toughest in the industry and have barely changed in decades. What's burdening it at this time is the collapse of the subprime mortgage market (and its 0% down no doc loans) and the mandate that Bush put on HUD in 2007 to pick up that slack.

 

[zephyrprime]

Of course it will need a bailout. I work at the mortgage division of a big bank. Won't say who, but I will say it's a big national bank. I was walking down the cubicle aisles just the other week and I overheard one of the underwriters say that "man, I'm doing more FHA loans than regular loans". In the wake of the subprime collapse, the US government has stepped into the void to provide loans to people who don't have a regular job and don't have 20% down. The government is not as egregious with their lending standards as the subprime lenders were but it's still not good. We're still giving mortgages to people who are not financially solvent enough to get them.

 

[zephyrprime]

Originally posted by: b0mbrman
Would you also be in favor of ending the mortgage interest deduction?

The problem with ending the mortgage interest deduction is that doing so would give an unfair advantage to renters relative to homeowners. A renter's landlord can deduct mortgage interest from his revenue because mortgage interest is a legitimate business expense for him. If homeowners couldn't do that, then it would become economical for two people to buy houses and then rent them out to each other. Doing so would be cheaper than simply buying a house.

 

[Slew Foot]

I think its funny that FHA is backing loans up to 750K in CA. I mean if youre looking at spending 750K on a house, you dont need the govts help.

 

[zephyrprime]

Originally posted by: Vic
FHA underwriting standards are among the toughest in the industry and have barely changed in decades. What's burdening it at this time is the collapse of the subprime mortgage market (and its 0% down no doc loans) and the mandate that Bush put on HUD in 2007 to pick up that slack.

Give me a break. Pure BS. The whole reason the FHA exists is to allow people to get mortgages who couldn't otherwise get mortgages. You're playing a dishonest game of misinformation because you imply that FHA is in the same industry as lenders when it is not. (It is in the industry of lending insurers for all you ATPN'ers). The government shouldn't even be in that industry.

 

[rudder]

Originally posted by: Fear No Evil

Originally posted by: b0mbrman

Originally posted by: Fear No Evil

Originally posted by: b0mbrman

Originally posted by: Patranus

What do ya know, another program designed to help people buy houses that shouldn't be buying houses in the first place is going bankrupt. Thanks government!

Yes.

"What do ya know, another program designed [in the 1930s] to help [tens of millions of] people buy houses that shouldn't be buying houses in the first place is going bankrupt [after operating deficit neutral for 75 years]. Thanks government!"

But, generally I agree. Our laws do too much to skew us toward home ownership, and buyers at every level take on more house than they "should."

Would you also be in favor of ending the mortgage interest deduction?

I'd support ending the mortage interest deduction if we eliminate the deduction for children. The MID is about the only thing I can deduct as a married person without children. I pay CONSIDERABLY more in taxes than people with children who cost society MUCH more than me and my wife do.

I'm sure it's not the only thing...property tax

Anyhow, would you say the tax benefits factored into your calculations at all?

Oh, sure. I can deduct property taxes. Of which about 75% goes to the public schools. Let me count the # of children I have.. Oh, thats right.. ZERO.

Hopefully you live in a good school district which will help the value of your home. It helps me.. but my property tax is around $1400/year.

 

[imported_inspire]

Originally posted by: JSt0rm01
I think people need to understand that sometimes renting makes sense.

:thumbsup:

Our society has become increasingly mobile in every sense. Meals are taken on the go, vehicles are now traded in sooner, etc. The concept that home ownership is a good investment runs contrary to the increasing mobility. It has turned housing from a necessity market into a commodity market.

 

[Munky]

Originally posted by: Slew Foot
I think its funny that FHA is backing loans up to 750K in CA. I mean if youre looking at spending 750K on a house, you dont need the govts help.

They do so, because that's how banks make money... by lending out credit with the attached interest. The whole irony is that with the fractional reserve policy under which banks operate, they just create the money out of thin air - they don't actually have the cash to back up the loans they make. So when things go sour and people can't repay the loans, guess what happens? That's right, the banks go bust because the money they loaned out never actually existed.

 

[Onita]

Originally posted by: zephyrprime

Originally posted by: Vic
FHA underwriting standards are among the toughest in the industry and have barely changed in decades. What's burdening it at this time is the collapse of the subprime mortgage market (and its 0% down no doc loans) and the mandate that Bush put on HUD in 2007 to pick up that slack.

Give me a break. Pure BS. The whole reason the FHA exists is to allow people to get mortgages who couldn't otherwise get mortgages. You're playing a dishonest game of misinformation because you imply that FHA is in the same industry as lenders when it is not. (It is in the industry of lending insurers for all you ATPN'ers). The government shouldn't even be in that industry.

Proof? I'm getting an FHA mortgage. I guess I should stop because I don't deserve it.

 

[waggy]

Originally posted by: zephyrprime

Originally posted by: Vic
FHA underwriting standards are among the toughest in the industry and have barely changed in decades. What's burdening it at this time is the collapse of the subprime mortgage market (and its 0% down no doc loans) and the mandate that Bush put on HUD in 2007 to pick up that slack.

Give me a break. Pure BS. The whole reason the FHA exists is to allow people to get mortgages who couldn't otherwise get mortgages. You're playing a dishonest game of misinformation because you imply that FHA is in the same industry as lenders when it is not. (It is in the industry of lending insurers for all you ATPN'ers). The government shouldn't even be in that industry.

not true.

FHA has many diffrent types of loans. some are for those that really shouldnt have loans. but there are loans out with reduced interest but you still need good credit to get. Those are to get people (first time homeowners) to buy in smaller towns to help them grow.

those are not low income loans at all.

 

[Vic]

Originally posted by: waggy

Originally posted by: zephyrprime

Originally posted by: Vic
FHA underwriting standards are among the toughest in the industry and have barely changed in decades. What's burdening it at this time is the collapse of the subprime mortgage market (and its 0% down no doc loans) and the mandate that Bush put on HUD in 2007 to pick up that slack.

Give me a break. Pure BS. The whole reason the FHA exists is to allow people to get mortgages who couldn't otherwise get mortgages. You're playing a dishonest game of misinformation because you imply that FHA is in the same industry as lenders when it is not. (It is in the industry of lending insurers for all you ATPN'ers). The government shouldn't even be in that industry.

not true.

FHA has many diffrent types of loans. some are for those that really shouldnt have loans. but there are loans out with reduced interest but you still need good credit to get. Those are to get people (first time homeowners) to buy in smaller towns to help them grow.

those are not low income loans at all.

No, he's part right. FHA doesn't make loans, they insure them. But where he's wrong (or perhaps being dishonest) is that, just like any mortgage insurer, FHA sets the underwriting guidelines and certifies the underwriters.

FHA's problem right now is that when the subprime market collapsed in July 2007, it ended up taking over what was left of that market. But FHA doesn't insure liar loans like subprime did, where the borrower doesn't document his income. In fact, FHA's income ratios and documentation guidelines are extremely strict. And so are FHA's appraisal guidelines. The combined result was that, in those markets where subprime loans were exploding the bottom of the real estate market with liar loans, home prices rapidly fell roughly to what FHA's guidelines would allow. And that drop in home values encouraged many of those who were underwater but still performing to default, which reduced home values even further, which damaged the overall economy, and so forth.

 

[b0mbrman]

Originally posted by: Vic

Originally posted by: waggy

Originally posted by: zephyrprime

Give me a break. Pure BS. The whole reason the FHA exists is to allow people to get mortgages who couldn't otherwise get mortgages. You're playing a dishonest game of misinformation because you imply that FHA is in the same industry as lenders when it is not. (It is in the industry of lending insurers for all you ATPN'ers). The government shouldn't even be in that industry.

not true.

FHA has many diffrent types of loans. some are for those that really shouldnt have loans. but there are loans out with reduced interest but you still need good credit to get. Those are to get people (first time homeowners) to buy in smaller towns to help them grow.

those are not low income loans at all.

No, he's part right. FHA doesn't make loans, they insure them. But where he's wrong (or perhaps being dishonest) is that, just like any mortgage insurer, FHA sets the underwriting guidelines and certifies the underwriters.

FHA's problem right now is that when the subprime market collapsed in July 2007, it ended up taking over what was left of that market. But FHA doesn't insure liar loans like subprime did, where the borrower doesn't document his income. In fact, FHA's income ratios and documentation guidelines are extremely strict. And so are FHA's appraisal guidelines. The combined result was that, in those markets where subprime loans were exploding the bottom of the real estate market with liar loans, home prices rapidly fell roughly to what FHA's guidelines would allow. And that drop in home values encouraged many of those who were underwater but still performing to default, which reduced home values even further, which damaged the overall economy, and so forth.

Can you link me to a good comparison of FHA guidelines and standards v. rest of industry?

 

[dmcowen674]

Originally posted by: Onita

Originally posted by: zephyrprime

Originally posted by: Vic
FHA underwriting standards are among the toughest in the industry and have barely changed in decades. What's burdening it at this time is the collapse of the subprime mortgage market (and its 0% down no doc loans) and the mandate that Bush put on HUD in 2007 to pick up that slack.

Give me a break. Pure BS. The whole reason the FHA exists is to allow people to get mortgages who couldn't otherwise get mortgages. You're playing a dishonest game of misinformation because you imply that FHA is in the same industry as lenders when it is not. (It is in the industry of lending insurers for all you ATPN'ers). The government shouldn't even be in that industry.

Proof? I'm getting an FHA mortgage. I guess I should stop because I don't deserve it.

Absolutely, according to the AT elite you must rent the rest of your miserable life.

 

[b0mbrman]

Originally posted by: dmcowen674

Originally posted by: Onita

Proof? I'm getting an FHA mortgage. I guess I should stop because I don't deserve it.

Absolutely, according to the AT elite you must rent the rest of your miserable life.

Nothing wrong with renting...

 

[dmcowen674]

Originally posted by: b0mbrman

Originally posted by: dmcowen674

Originally posted by: Onita

Proof? I'm getting an FHA mortgage. I guess I should stop because I don't deserve it.

Absolutely, according to the AT elite you must rent the rest of your miserable life.

Nothing wrong with renting...

As long as it's all rich Republican landlords such as yourself eh?

 

[PricklyPete]

Originally posted by: JSt0rm01
I think people need to understand that sometimes renting makes sense.

bingo.