Federal Housing Administration Going Bust

With the default of the FHA coming, they say they are dealing with the problem, it's just another sign of the failure of the progressive socialist agenda demanded by Mr Obama and his team to "fundamentally" change America.

The housing disaster that was started back in the Carter years and stepped up during the Clinton years, Community Reinvestment Act, designed by Chris Dodd and Barney Frank, both progressives Democrats, where anyone that breaths air got a loan to buy a house. No down payment, no job, can't speak English, can't write or read made no difference, they still got a loan. Millions and millions of loans were sold like this even though the banks knew they would go bad and told the government of their fears.

And as we all remember, Clinton's attorney general threatened the banks if they didn't comply.

As most everyone is aware that watched FOX or read the Wall Street Journal back then, but if one just watched the lettered TV channels or read the New York Times, you had no idea what was going on, this all lead to the collapse of the housing market, forcing the entire economy into recession.

Now the FHA is losing money hand over fist but the progressives say they can handle the problem, and it's true, they can. They will handle it like all the financial problems we've had and that's with more taxpayer dollars.  hehe - taxpayers are such suckers for a big smile and a bucket of promises. 

How to Fix the Federal Housing Administration
Source: Edward Pinto, "How to fix the Federal Housing Administration," American Enterprise Institute, November 19, 2012.

November 21, 2012
The Federal Housing Administration (FHA) has released its fiscal year 2012 Actuarial Study for its main single-family insurance program. The report confirms that the economic value or capital position has turned negative by $13.5 billion, says Edward Pinto of the American Enterprise Institute.

There are constant swings in the projection of future fiscal year. For example, fiscal year 2018 is negative $17 billion compared to last year's projection. This is primarily due to the model that the FHA uses to calculate actuarial soundness.

Despite the constant negative reports, the FHA assures Congress that future years will be better. However, delinquencies continue to increase with one in six FHA loans delinquent 30 days or more.

Given the FHA's poor performance and irresponsible lending practices, two important steps must be taken:

•First, Congress should require a safety and soundness review of the FHA.
•Second, the FHA must show Congress that it has a way to deal with its insolvency.

The latter can be accomplished in a few ways:

•Reduce the risk layering combining on its high risk mortgages.
•Announce that it will no longer knowingly insure a loan for any family where the expected foreclosure rate is 10 percent or more.
•Additionally, borrowers that take out high risk loans should be offered either a loan with minimal down payment or a slowly amortizing 30 year term.