FHA loans were created during the Depression to help low-income families become first time homeowners. The program was never meant to be used to...
FHA loans were created during the Depression to help low-income families become first time homeowners. The program was never meant to be used to...
View Housing Market Watch RSS feedThe U.S. Senate passed legislation on Friday that will expand the capabilities of the Federal Housing Administration. The bill will loosen underwriting standards and raise the limits on loans. Although this legislation is supported in certain circles, critics call it a threat to taxpayers.
FHA loans were created during the Depression to help low-income families become first time homeowners. The program was never meant to be used to rescue people who bought more house than they could afford--but it may be used this way soon.
In a vote of 93 to one, the Senate overwhelmingly passed legislation to expand the FHA so that more subprime borrowers can refinance into federally insured fixed rate loans.
The bill will raise the size of loans that can be insured by the Federal Housing Administration from $362,000 to at least $417,000, and will lower down payment requirements from three percent to 1.5 percent.
A different (albeit similar) FHA reform bill was passed in October by the House of Representatives. A compromise between the two bills is expected soon. The FHA estimates the changes could allow the agency to help more than 200,000 borrowers avoid foreclosure.
Policymakers want the public to think that the FHA is a prudent organization, but that is simply not the case.
The truth of the matter is that the FHA has become more 'subprime' than actual subprime lenders. The agency played a significant role in the mortgage meltdown in their misguided attempt to compete with other mortgage lenders. Entire segments of the mortgage industry collapsed because of FHA-subsidized mortgage products.
According to the Mortgage Bankers Association, delinquency rates on FHA insured mortgages have been consistently higher than rates on subprime loans for the past three years.
In other words, the FHA is part of the problem--not part of the solution.
Furthermore, the FHA expects to be operating in the red by next year, which means they will be paying out more for defaulted loans than borrowers pay in to the agency in insurance premiums. Since the loans are federally guaranteed, taxpayers will be forced to step in and pick up the pieces.
By expanding the FHA's role, policymakers are ensuring that subprime risk is transferred from current lenders and investors directly to taxpayers. This is good news for banks and anyone else who gambled on subprime loans and the housing market in general over the last few years, but it is terrible for taxpayers and future borrowers.
Worse yet, it is unfair. The majority of the people who need the bailout entered into agreements of their own free will. They were not duped. They had ample opportunity to learn about the market, crunch the numbers and review the agreements that they signed.
They were irresponsible and now they are paying the price. This is not a tragedy. A tragedy is the American government stepping in and acting like an unlawful dealer for a debt-addicted society filled with people that can't seem to live within their means.
Mortgage company Countrywide Financial is now under fire for the role that they played in the ongoing housing crisis. Critics accuse this mortgage provider of having engaged in questionable lending practices in order to extract maximum profits. Countrywide CEO Angelo Mozilo, who has dumped his own stock, responds to the charges.
The recent rise and fall of the U.S. housing market is not that different from Japan's multi-decade housing crash. We'll compare the two bubbles here and see if there is anything that the U.S. can and should learn from Japan's fallacies.
The San Francisco Bay Area housing market set yet more records during the month of September. Homes sold at the slowest pace seen in two decades and foreclosure activity was higher than ever.
The housing market in the San Francisco Bay Area continued to struggle in the month of March. Home sales were at the lowest level since 1996, with Solano and Contra Costa Counties seeing declines of more than 30 percent. Median prices also fell in several counties in the nine-county region, but for the most part, prices remained flat.
The housing market continues to slip in most parts of the Bay Area. Median home prices dropped most notably in Sonoma and Solano County, while Marin and Santa Clara County housing markets saw modest increases.
We all know how fiscally terrifying the purchase of a first home can be, no matter what the cost. With closing costs, down payments and other fees to consider, it's easy to feel overwhelmed. Fortunately the government and a number of creditors understand your pickle and have designed programs that can help. Read this article to learn more!
The National Association of Realtors is still working overtime to convince the American consumer that the housing market is starting to turn around. What's worse is that some media outlets are buying this story and passing it on to people who are looking for real news.
Most homebuyers choose to finance their homes. This article discusses the most common types of home loans available.
The San Francisco Bay Area housing market suffered another blow in October as home sales fell to the lowest level on record and prices continued to decline. Areas documenting negative home price appreciation included Solano, Sonoma, Alameda and Contra Costa Counties.