while the aftermath of subprime housing delinquencies / bankruptcies has already caused enough bank failures to draw down the FDIC's insurance fund to near zero, nobody has bothered to mention that the FHA is also on the hook for subprime mortgage lending losses.
(snip)"Oct. 8 (Bloomberg) -- The Federal Housing Administration, which insures mortgages with low down payments, may require a U.S. bailout because of $54 billion more in losses than it can withstand, a former Fannie Mae executive said.
“It appears destined for a taxpayer bailout in the next 24 to 36 months,” consultant Edward Pinto said in testimony prepared for a House committee hearing in Washington today. Pinto was the chief credit officer from 1987 to 1989 for Fannie Mae, the mortgage-finance company that is now government-run.
The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, Pinto said. The jump has left the agency backing risky loans and exposed to fraud in a “market where prices have yet to stabilize,” he said.
Representative Scott Garrett, a New Jersey Republican, introduced legislation this month to boost the FHA’s minimum down payment to 5 percent from 3.5 percent to help shore up the agency’s insurance fund, a move that could add to the housing market’s burdens as it struggles to recover.
The market could also get less help from government aid programs that may lapse, including buyer tax credits and the Federal Reserve’s effort to cut loan rates by buying bonds. "(snip)
OOOHHH ... the gov't is now going to start requiring a 5% down payment from new low income / minority / inner city subsidized subprime home mortgage borrowers ??? How about an income verification ? For that matter, how about a citizenship verification ?



Reply With Quote

Bookmarks