Posted on 03/08/2009 11:34:48 AM PDT by prplhze2000
Think the housing industry can't implode any further? Guess again. Now FHA defaults are skyrocketing. The Washington Post published a very good story today on this problem. Buckle your seat belts: ..... However, the pressure to use FHA programs has been great the last few years as many mortgage companies who only originated subprime mortgagees and were facing extinction obtained FHA licenses so they could pursue subprime borrowers as FHA had easier underwriting requirements compared to Fannie Mae and Freddie Mac. Some subprime lenders entered the FHA market just to stay afloat even though they lacked any FHA expertise.
One such lender was GMFS in Baton Rouge. The owners once operated United Companies and UC Lending, former subprime lenders that collapsed in a similar implosion of the subprime mortgage market in the 1990s. Undeterred, they opened another subprime mortgage lender a few years later, GMFS LLC. As subprime lending withered, GMFS received approval from HUD to become an FHA lender, thus allowing it to escape the collapse of the subprime mortgage industry. Unfortunately, GMFS's track record on the performance of its FHA loans dovetails with the assertions made in the Washington Post story about new FHA lenders contributing to the FHA implosion. ......
(Excerpt) Read more at kingfish1935.blogspot.com ...
I take it this is a really really bad thing, right?
Old news, actually...but yeah, a problem.
Bad for several reasons. Its the only way many mortgage companies and lenders are staying in business. Bad for taxpayers. Its bad period.
It seems like the problem here isn’t FHA, or the market, or the economy so much as outright fraud.
When the Ameridream type stuff was eliminated, I think some companies decided to just outright fake documents to get loans done (cut-and-paste on the copy machine, etc...)
maybe so but I think the lenders that entered FHA had no clue what they were doing.
I worked for one one time, fired an underwriter. She never signed off on a MCCAW (don’t ask, its an FHA required doc from lender that has to be signed by underwriter) for two months. That meant they had two months of FHA loans suspended by HUD they had to clear before HUD would insure them. they had no FHA expertise at all.
“It seems like the problem here isn’t FHA, or the market, or the economy so much as outright fraud.”
You got it.
http://market-ticker.org/archives/857-The-Bezzle-Defined.html
/sarc
Don’t worry man, Obama is here.
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