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FHA Is Getting Sick Of Feeding The Next Housing Bubble, To Raise Minimum Downpayment
Developing story, and just a headline for now: FHA Weighs Raising Borrower Premiums, Minimum Downpayment. What a novel idea: to not feed another round of the same housing bubble that nearly destroyed the financial world. Someone in D.C. is really earning their salary.
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Its very smart....after suckering a whole bunch of borrowers to get back into housing, they raise the premiums. This is amazing!...middle class gets raped again.
Unfortunately anything short of continuing the ponzi full steam ahead will cause some serious short-medium term pain. But then again cortizone doesn't fix the pain, it just masks it.
I'm with you bro, but looking at the labor markets, short of giving the property away I don't think there's much that can be done to stimulate new home purchases in any meaningful way without putting paychecks into people's hands.
This, of course, ignores whatever impacts people walking away from their homes is having.
I don't know.
It use to be that home ownership was a function of income.
Then home ownership got infiltrated by the speculators.
A lot of money can come pouring back into this market if the dollar falls a little more. Europeans can buy up real estate at great discounts with the EUR/USD @ 1.50.
That's why the Miami market is back on fire.
(overseas) Asian buyers are all over the SoCal market as well.
What a deal, we buy their junk from WalMart, they recycle those dollars into oceanfront properties in Malibu.
It works for Canadians too. You buy our oil, we buy a forclosed condo that once sold for $290,000 for $80,000.
How about a gov't program to provide 3% mortgages to anyone? Heck, the private mortgage market is dead anyway.
That's because we SHOULDN'T be stimulating the housing market! Duh!
+1
God I hope it gets raised to 20%! But I'm sure thats just wishful thinking upon my part. :-(
Obama and ACORN will put a stop to that thinking.
Uh Oh. The bad paper is getting harder and harder to ignore.
You can only paint so much lipstick on this pig before you eventually run out of pig.
and lipstick, taxpayer funded, expensive lipstick...shade? RED, we're-effin'-broke red.
That will light a fire on potential home buyers behinds. BUY A gosh darn house already because soon you might have to actually show some creditworthyness.
Boy them folks a sharp, can't slip nothing by them...
Gotta get the interview from CNBC.
FHA commissioner says “bailout” is not the right word because “bailout” applies to private companies and FHA is a government agency.
Technically he is right.
I have far less problem with the FHA getting more money, than, say, AIG, or even Fannie/Freddie getting bailed out.
The folks at the FHA are government employees, and are paid as such, and have no motive to falsely jack up profits to get bigger bonuses. They are doing what the government mandates them to do. If we don't like it, we can vote out their puppet masters. If we don't, shame on us.
But Fannie/Freddie are a different matter altogether. I know people there who are getting far more than they would if they were government employees. Look at how much Freddie's new CFO is getting paid. It is outrageous given how much the taxpayer is putting into those guys.
Gotta get that $8k back. Garbage in Garbage out.
That'll finish off anything masquerading as a recovery in housing. Those using the FHA program and it's a lot of folks now, are qualifying on razor thin margins this ought to rightly kill off these homebuyers -- how will the banks like choking down all that shadow inventory once the prices begin their move down the slippery slope.
It'll never happen, at least not while this housing cycle is playing out.
The FHA tried for years to implement risk-based pricing, you know, that novel concept that not all risks are equal, and they should price accordingly.
They were never allowed.
They fought for years to get rid of DPA programs, and couldn't do that until the IRS finally stepped in and disallowed the tax-exempt status of the DPA funds.
Also, if they raise premiums without raising the downpayment requirements that'll just mean more gets financed into the loan which in turn means borrowers have even less skin in the game once prices fall.
if the headline gets traction it may actually create a burst in activity by the myopic to get in under the wire
"FHA Weighs Raising Borrower Premiums, Minimum Downpayment."
Of course they are! But by how much? And how come FHA EasyMoney is still around? Shouldn't the FHA be emulating the strictest lending standards known in banking.
If you get wounded during a Fight Club fight, a deep cut from a glancing blow. You get stitches for the wound and then rest so the wound heals.
After a little digging it seems that any rumors to the effect noted above are tied to the FHA report issued this morning that showed eroding capital reserves.
There is a bill, HR 3706, that was introduced by some Jersey Rep which would set the FHA downpayments to 5% from the current 3.5%. That bill will die in the inbox of Barney Frank's Financial Services Committee.
Further A WSJ article out this morning notes that the FHA is pushing back against any measures like higher down payments.
http://blogs.wsj.com/developments/2009/11/12/fha-report-could-spark-political-battle-over-housing/
So as noted above it would most likely take legislative action to effect such a change, and no way no how any such bill is getting through Frank's committee.
I would absolutely embrace any rebuttal that would put more meat on this story, but from this kid's perspective atm we just have an interwebs rumor here.
Makes sense. FHA took the offensive on various media outlets to soften the story of the delayed-but-now-released independent audit. They are ridiculously standing by their story that they will not need more capital. What can you do? They are faced with a capital ratio around 5% and they lie right to your face that they won't need more capital. And that's after they got an extra week to develop their 'spin' before the audit was released? This game is just about over.
- AIG (AIG) may borrow additional money from its five-year Fed credit line in order to make $5.8B in payments on a commercial paper program expiring in January. The insurer owes more than half of the $10B still outstanding in the Fed facility, while other companies that took part have found private-sector alternatives or scaled back short-term borrowing.
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Another "flush" moment in this long line of government and federal blunders, corruption, and ineptitude with our tax dollars and US financial stability. I'm glad AIG is focused on their "pay checks" as the ship sinks.Nov 12 11:21 AM |Report abuse | Link | Reply
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Gee, all that "talent" that needs to be compensated and they are still losing money.Nov 12 11:54 AM |Report abuse | Link | Reply
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- 20percentsharpshoote...
God dXXit, why are we making these people whole and even on interest payments...this is f'd up for sureIts all good because they are swinging to quarterly profits!! (see below) snark/
AIG swings to a third-quarter profithttp://www.marketwatch.com/story/aig-swings-to-a-third-quarter-profit-2009-11-06?siteid=yhoof2
Bolted door stable horse after
The FHA is toast
http://www.cnbc.com/id/15840232?video=1328135588
.53% of Cap Reserves. LoL
Burnt, blackened toast.
I am a realtor in N. Orange County, Ca. and participated in the panic buying over the past 3 months due to the $8000 tax credit, essentially zero down (3% FHA less 3% cash from buyers for closing costs), record low interest rates (thank you FED) and the false tightness in the market (due to 1000's of homes being held off the mkt by the banks). It was a phony recovery. But I loved the commissions!!! Most of the buyers were teachers and city employees who incorrectly believe they are immune from the downturn.
Surprise, surprise, once again the middle class is burned by a false housing mini-bubble.
That's why we call them "sheeple".
my mom a teacher . Got a house in Sacramento county 5 months ago. went from 1150(and rising) a month rent in a apartment with the land lord upstairs to a nice neighbor hood with a fence, a yard, a garage and everything works for $900 a month(fixed for 360 months.)
she cut 600 miles a month off her commute. she now has a washer and dryer that doesn't take quarters to run. Kids actually come to the door for Halloween.
sure all the neighbors are God-Fearing-Republicans, but you can't have everything. and that 8K of Obama money. Come tax return day she will be out of credit card debt(24% interest) that will free up another $300 plus a month. in 2 years all debt but the house will be paid off. She gone from never gonna get out from under this rock to having a chance of a few years of retirement before dying.
The fight of the century: Balding Ben B. versus RE Price Demon of Debt
UP or DOWN who will win. The FED or the MARKET.
Ben B. has practically played all of his cards, and thrown another few decks on the table for good measure, in an attempt to stabilize RE prices, by purchasing deleverage RE debt at a loss, instead of letting it default through bankruptcy. An epic battle, fought with Trillion upon Trillions of tax payer dollars in an attempt to do something completely unnecessary. A classic case of the cure being worse that the disease.
I wonder if people at the FED actually visit the country they control, ya know to, like, maybe figure out how it really works, and not just subscribe to some BS economic model when the fate of the nation lies in the balance.
With the extension of the First time, correction, almost anytime, home buying credit, and lax FHA Mortgage backing, it is an all out assault from the FED to the Hill, to increase RE prices. Some may say to needlessly re-inflate the previous bubble.
If they lose, given the FEDs QE power, and control over the GSEs, it will be an epic failure, epic wealth destruction, and done without the consent of the people.
Mark Beck
So is this the answer to raising interest rates.
This just in...
The first time home buyer credit has been increased to 20k.
funny and probably right...maybe 15k.
Who could fathom proper underwriting standards? In the U.S? You don't say. Hmmmmmm. How dare those bastards require a down payment!!
Whaddya mean 'the middle class gets raped again' ?
scuze me, but if you dont have a reasonable deposit, ur probably not middle class, and you (and the financial sector) dont deserve a ratified mortgage contract