KEY POINTS:
* While the FHA the Obama Administration politically, it arguably prolonged the recovery by failing to let prices find a bottom.
* FHA’s boom put taxpayers on the hook for tens of billions worth of dubious loans made at the most dubious time. Those are the loans now going bust.
* According to the new HUD report, FHA loans insured between fiscal 2007 and 2009 “continue to place a significant strain on the [single-family mortgage insurance] Fund and are expected to reach a total of $70 billion in claims.”
* The ugly math: 25.82% of FHA’s 2007 loans, 24.88% of its 2008 loans, and 12.18% of its 2009 loans were seriously delinquent as of June 30.
* The American Enterprise Institute’s Ed Pinto, who also predicted the FHA debacle, estimates that 17.3% of all FHA loans were delinquent as of September 30. That’s about one in six loans.
How can the FHA’s loan portfolio be performing so poorly? I keep reading that the housing market is ROARING back, stocks are picking up, hiring is up, and everything is rosy. The local paper tells me so.