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.
According to the Mortgage Bankers Association nationwide, about 17 percent of FHA borrowers have missed at least one payment or in foreclosure, compared with 13 percent for all loans. Plus, about 20 percent of new loans today are insured by the FHA, up from as low as 2 percent during the subprime loan boom. The vast majority of these loans are made with just 3.5% down-payment.
Commissioner David H. Stevens told reporters: “To be clear, the fund’s reserves are sufficient to cover our future losses. That said, given the size and scope of the FHA and its importance to today’s market, these risk management and credit policy changes are important steps in strengthening the FHA fund, by ensuring that lenders have proper and sufficient protections.” La Jolla real estate
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You made some good points, and you’re right. Yet I’ve heard some compare the current stock market to the early 70’s. I can actually remember where there wasn’t money available for conventional loans, you had to get your loan in by the first of the month, because you knew they couldn’t commit much later, there was only so much $ to go around. Then again some lenders would only make loans if they had the existing loan. I thought oh well; guess I’ll just have to do FHA/VA loans for a while. We will get through this.
San Diego California real estate
Heh, I read those articles..
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I believe a lot of people who purchased with subprime loans and were not really qualified have to accept the inevitable consequences and perhaps build up their savings and credit while renting until the next purchase opportunity.
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