“Under no circumstance will any taxpayer bailout be needed,” said David Stevens, the F.H.A.’s commissioner.
Posted on 09/18/2009 11:05:54 AM PDT by reaganaut1
The Federal Housing Administration said Friday that its financial cushion will sink below mandatory levels for the first time in its history, but officials insisted the agency won’t need to be rescued.
“Under no circumstance will any taxpayer bailout be needed,” said David Stevens, the F.H.A.’s commissioner. He also said its borrowers are unlikely to see any change.
Amid the collapse of the subprime lending market, the government has taken up the slack. The F.H.A. has insured nearly a quarter of all new loans made this year, and about 80 percent of that business is from first-time homebuyers.
But the agency has faced mounting concerns on Capitol Hill that it will soon need a taxpayer bailout. As of this summer, about 17 percent of F.H.A. borrowers were at least one payment behind or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association.
Plummeting home prices, Mr. Stevens said, are the main reason its financial reserves are dwindling. While an earlier analysis had assumed prices would hit bottom this year, the agency now is assuming prices will fall through next spring.
The agency itself does not make loans, but rather offers insurance against default. Many borrowers are willing to pay for the insurance because F.H.A. loans only require down payments of 3.5 percent of the purchase price.
The F.H.A. now insures about 5.3 million mortgages, up from about 4 million three years ago.
(Excerpt) Read more at nytimes.com ...
“Under no circumstance will any taxpayer bailout be needed,” said David Stevens, the F.H.A.’s commissioner.
FHA still writing many subprime mortgages. 35% of those in the last 8 months are in default. Here we go again.
They are now guaranteeing loans up to 105% of home values and they will soon be guaranteeing up to 125%. They are setting us up for a fall.
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