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FHA’s finances are still a mystery
November 5th, 2009, 8:23 am · 16 Comments · posted by Mathew Padilla
Federal Housing Administration insured loans have accounted for about 25% of purchase home loans in Orange County over much of this year, after the loan limit was raised to nearly $730,000 in high-cost areas like this county. FHA’s market share has also grown nationwide.
With FHA’s insurance pool covering many more loans and much bigger loans, some critics are worried a taxpayer bailout may be necessary someday soon.
The release of an independent audit by Integrated Financial Engineering (IFE) was supposed to end the speculation. But the Washington Post reported yesterday that FHA abruptly delayed the audit’s release, citing “problems with the accuracy of some of the study’s economic models.”
FHA Commissioner David H. Stevens said the delay was related to economic scenario tests that the agency requested “above and beyond” what was originally to be included in the audit so that the FHA could “better understand a broader range of risk scenarios.”
“Based on these results, we raised questions about the accuracy of IFE’s modeling, and IFE therefore advised us that we should not treat the report as final,” Stevens said. “IFE is now running additional tests to ensure that the final report is accurate.”
Delaying the report right before it was supposed to be released is bad timing. And I wonder what the auditor thought of FHA’s ability to withstand those “risk scenarios” Stevens is talking about.
IFE said it will address the issues and finish the report as soon as possible.
More from this blog…
- How about a tax credit for ‘responsible’ homeowners?
- Refi demand up, purchase down on drop in rates
- Price rebound parallels foreclosure drop
- Foreclosures just 4% of homes for sale
- Cash-out refis at 6-year low
- Minorities get fewer mortgages. But is that bad?
- Loan aid firms skirt ban on advance fees
- Reader owns too many homes for another loan
- These homes are about to be foreclosed
- Fed ending Treasury purchases. Will rates rise?
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Yea the healthcare bill finances are also a mystery also. Obama’s math- a lie, plain old lie. I think he is worse than carter.
It’s fully funded, which means a tax increase “for the rich” is built into the bill. The mystery to me is what Obama defines as rich.
A taxpayer bailout may become necessary? That’s a laugh.
When you’re making a loan with a 96.5% loan to value (buyer puts 3.5% down), the buyer is already underwater because if it would cost approx. 7% to 8% to sell with commissions and closing costs. if prices continue down it’ll even be more of a loss.
It’s even worse if the seller pays the buyers nonrecurring closing costs (which happens a lot in FHA transactions).
Can’t you use that 8k on your down? In some cases its 0 down for entry.
Uncle Obama should fuse the housing and clunkers credits together for a package deal in June after this runs out. Call it Hunkers or something with a one year free gift certificate to healthcare. If you need a house and have an old car, BAM!
I said it a year ago, FHA is the new subprime….
Tanta said that…
She also said “we’re all subprime now”.
Oh maybe that’s what I was thinking of.
check out the new “lease to own” aka how to keep losses hidden
from our books– and the scams go on and on and on
http://market-ticker.org/archives/1585-WHERE-ARE-THE-DAMN-HANDCUFFS-Fraudie.html
Didn’t read yours until I wrote mine, but yes this is the craziest stuff you could imagine. This is the Govs way of enforcing more bad behavior. If you are sitting in a house struggling and it needs repairs just stop paying. That’s one year free and then another year or so reduced.
Yep, now Fannie comes out with the “If your house goes into foreclosure we’ll rent it back to at a reduced rate” program. Wooo hooo!
This has to be one of the dumbest ideas I’ve ever heard.
Pulled out of a tax credit article.
“This is probably the last extension,” said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.
So, they can’t keep it up forever. When/if this actually expires and rates rise it will be like an atom bomb.
I couldn’t agree more.
I wonder if the govt will offer a new “Uncle Sam Mortgage”, where they’ll pay the first $1,000 of your mortgage payment each month.
FHA is definitely NOT the new subprime. Underwriting guidelines and credit requirements have gotten even more strict. To get an FHA loan is a a priviledge. It’s getting harder to qualify. Documentation on FHA loans has always been extensive and even more so now. On every new FHA loan I see a Form 4606T is signed and IRS transcripts are matched to borrowers’ copies of their tax returns.
The real problem with the industry were attempts to accommodate the self employed who game the system and refuse to pay their fair share of income taxes. I’m glad to see stated income loans gone and these tax cheats left out in the cold. Their stuck with their higher rates. Would love to see the IRS match tax returns to the mortgage interest statements and go after these people for tax evasion. How does someone show a loss or less than $30K annual income yet makes a mortgage payment of $2500+ per month? Tighten up the tax codes and end the free ride of the self employed!!! Why don’t we see more articles about how little these people pay in taxes compared to the rest of America??
“some critics are worried a taxpayer bailout may be necessary someday soon.”
This is way too hedged. How about “all disinterested observers are worried a taxpayer bailout may be necessary someday soon.”
Given recent history, would a taxpayer bailout of any government program be suprising (state and local pensions, unemployment/disability insurance, schools)?
do not worry though. under current economic plans, we will eventually all become chinese since they are trying to sell our country to china… that is what i guess…