Get Government Out Of The Housing Market
Housing Market
I’m all for removing government intervention in the housing market. But I also understand the pain we might have to endure if we did it all overnight. Perhaps instead of constantly looking for new ways of intervening, the government ought to start down the road of reducing future intervention by making the future purchase of new homes (those that haven’t gone beyond the planning stage) not eligible for any type of government backed loans. If buyers can come up with enough down payment to satisfy lenders to provide a loan free of government support, fine. Otherwise, let buyers seek already built homes. This is critical to removing more new supply from a market stock full of foreclosures. This might have a positive effect on home values, while also starting us down the road of less government intervention. Read more 
FHA Home Loans in Worst Shape in 75 Year History
FHA home loans
This latest FHA loan news should come as nothing new for all our long time readers. On 12-16-08 I published a post entitled FHA Home Loans – The Next Bailout? and than on 7-2-09, I published: FHA Home Loans Headed for Trouble? Just yesterday, the FHA said its financial reserves had sunk below mandatory levels for the first time in its 75-year history. While officials insist the agency won’t require a taxpayer rescue, falling home prices, rising unemployment and shady lenders continue to drive up default rates.
FHA Home Loans – The Next Bailout?
In San Diego, one major mortgage lender's new FHA loan originations went from approximately 2% to approximately 60% of new loans! The low down payment (apprx. 3%) and relative availability of FHA home loans are helping to drive hoards of borrowers to the FHA. Many new homeowners with the most risk and fewest dollars are going to the FHA for loans.
In 2007, they handled 3% of new loans. This year it's 26%. However, these additional higher-risk loans are stressing the FHA insurance system. So, now the FHA's own somewhat lax standards are coming back to create a huge hit to their loan insurance fund. It has dropped the FHA insurance fund 39% since last year, raising concerns for the FHA requiring its own bailout.
Related prior posts:
San Diego Housing Market … Hitting the Lottery (or not)
New Relief Program For Homeowners at Risk of Foreclosure
Hope For San Diego Homeowners
Real Estate – An Innovative Way of Not Filing Bankruptcy