Blog on the Run: Reloaded

Saturday, October 10, 2009 1:53 pm

Housing balloon 2.0

Filed under: We're so screwed,You're doing WHAT with my money?? — Lex @ 1:53 pm

Full disclosure: I’ve got an FHA mortgage. But I had to provide bulletproof documentation of our income to get it, and our down payment was WELL above the current mandatory minimum of 3.5%.

That out of the way, if you’ve ever wondered how you might go about re-inflating a popped housing balloon, here’s how:

The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, [consultant and former Fannie Mae executive Edward] 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.

Well, that’s just great. And the likely cost to taxpayers? $54 billion in the next 24 to 36 months, Pinto said.

Get out of town! That’s just nuts, said Rep. Maxine Waters, D-Calif.

Uh, no, not exactly:

“About 14.4 percent of FHA loans were delinquent as of June 30 and 2.98 percent were already being foreclosed upon, according to the Mortgage Bankers Association. The combined percentage for all mortgages was a record 13.16 percent, according to data from the Washington-based trade group, which said the share of FHA loans past due is being suppressed by the large amount of new debt …

… because, for those of you not following the bouncing ball, some of the problems with the new FHA debt have yet to come to light.

But they will. And you, O Citizen, are on the hook for them.

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