FHA Bombshell?

Veritas that was a nice answer but your missing the point here. Most of the screwball home financing schemes came about as a result of the fact that there simply weren't enough people available who could qualify to buy the new homes being built today under the standard rules. The banks who loaned the builders the money to build those homes in the first place suddenly discovered that like it or not they were on the hook for those houses one way or the other.
 
No Gary, you're missing the point. The FHA doesn't underwrite loans unless they adhere to their guidelines, period. The secondary market and tertiary derivatives markets which led to credit default swaps [which were basically illegal unregulated insurance instruments] led to the problem. This led to people having insane LTV ratios and being upside down with their mortgages when the housing market adjusted its price point. Also the ratings houses lied when the loans were bundled.
 
I am not talking about the FHA specifically at this point. I am talking about why this whole damn mess is falling down around our ears and might just possibly drag FHA down with it if some one soon doesn't figure out what to do about the problem of too many homes that are way outside the price range of your average American being built.
 
The OP is about the FHA. The builders are at fault if they overbuilt and can't turn their product. But that is another subject entirely.
 
Did anyone here even bother to read the article in the first post....

WASHINGTON, Sept 4 (Reuters) - The head of the U.S. Federal Housing Administration said on Friday the agency would not need a congressional subsidy even if its capital reserve ratio fell below 2 percent.
The Wall Street Journal on Friday reported that government officials believed the FHA was in danger of seeing its reserves fall below the 2 percent level demanded by Congress.

"Even if that level falls below 2 percent, FHA continues to hold more than $30 billion in its reserves today, or more than 5 percent of its insurance in force," FHA Commissioner David Stevens said in a statement. "Given this reserve level, FHA will not need a congressional subsidy....
 
I read it. I was trying to explain to the nutters how things actually work and they go off on tangents.
 
I read it. I was trying to explain to the nutters how things actually work and they go off on tangents.

They are just frightened because we have a black president.

Who happens to be doing a good job, by the way.
 

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