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Thread: FHA: Strong SELL

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    Default FHA: Strong SELL

    Well, this certainly is embarrassing. The Federal Housing Administration – the very agency the Bush Administration and Congress trumpet as the solution to the mortgage crisis – has announced that it suffered a $4.6 billion loss last year. This is one of the worst financial performances ever for the government's multibillion-dollar mortgage insurer.

    We'd hope this news might cause Congress to reconsider its plans to turn over some $300 billion of troubled loans to an agency already in financial distress. No such luck. A bill passed by the House and now being debated on the Senate floor would expand the FHA portfolio to about 1.5 million mostly high-risk subprime mortgages. So at the very time private lenders and investors are fleeing subprime markets, Congress wants taxpayers to dive in.
    http://www.financialarmageddon.com/2008/06/i-agree.html
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
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    Default Re: FHA: Strong SELL

    ^^^ there have been dozens of articles criticizing the FED's decision to allow the FHA to act as a 'stealth' conduit to rescue troubled banks and investment houses. The 'emergency decisions' made in mid-march set up the FHA as a de-facto division of the FED which allows banks to 'trade' shaky subprime loans or even shakier mortgage backed bonds / derivatives with the FHA in exchange for freshly printed US dollars ! Supposedly these are loans with the banks' 'toilet paper' serving as collateral, but in reality they are very probably one way transactions - with the US taxpayer stuck with absorbing the eventual losses.

    This new bill proposes to greatly expand the above practice by raising the current limits ... which will allow troubled banks to offload yet more of their 'toilet paper' onto the FHA and in turn the US taxpayer. Not to be too political in Dollar Den, but this is little more than a thinly disguised Democratic backed 'bailout package' for greedy banks and investment houses which would build on the de-facto $4.6 billion taxpayer dollars in 'bailout money' paid to those banks by the FHA last year.

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