Right Wing Dog

The FIGHT for The RIGHT!

Obama’s Congress is Giving Easy Money to Un-Qualified Home Buyers Thru The FHA as It Did With Fannie and Freddie. Barney Frank in The Drivers Seat!

Easy-money mortgages is still provided, by the feds

Is the ghost of Ted Kennedy driving this?

Easy-money mortgages with little or no down payment for buyers/pigs with bad credit/no credit was a thing of the past? The money trough is open.

You can get the money today, guaranteed by the federal government.

Barney Frank and Chris Dodd at work:

Loans insured by the (FHA) have become “the new subprime,” and these loans are exposing taxpayers to the same kinds of soaring default rates and losses that brought down Fannie Mae and Freddie Mac as well as destroyed many banks and the private market for mortgage loans. Frank and Dodd don’t care as long as the shlubs that borrow this money vote for them and their party!

While private lenders learned a lesson from the mortgage crisis and are shying away from easy-money loans, the FHA has stepped in. The agency is backing for 37 percent of all mortgages used to buy homes this year.

After the collapse of the private mortgage market last year, Congress and the George W. Bush administration greatly expanded the FHA’s original Depression-era program aimed at assisting sales of modestly priced homes by more than doubling the ceiling on loans that the agency can insure to $625,500 while maintaining its loose lending terms – ensuring that nearly any home sale could be covered by the agency.

The FHA’s predominance was enhanced further this year when Barack Hussein Obama’s Congress lifted the ceiling to more than $729,000 for major urban areas and passed an $8,000 tax credit for first-time homebuyers that can be accelerated for borrowers to use as a down payment on FHA loans and avoid any cash commitment to their home purchases. No money down on big money homes means forclosure in a year or two and a HUGE loss to the American Taxpayer!

While these changes were intended to be temporary and expire by the end of the year, given the fragility of the housing and mortgage markets, Congress is considered likely to extend them this fall. Of course they will, 2010 is an election year.

Use of the same bad credit practices that were at the root of the housing crisis, likely feeding further waves of default and foreclosure. But this time it is the taxpayer – not the banks – who could end up holding the bag.

The surging default rates of more than 30 percent on loans insured since 2006 by the FHA. That is not far below the 40 percent rate of default and foreclosure on the notorious subprime loans that ignited the credit crisis.
FHA’s portfolio is exploding and the taxpayer is now on the hook for 100 percent of the losses,”

FHA’s growing default problems are the results are the same – unsustainable/bad loans perpetuate the nightmare of foreclosures.”

It is estimated that 20 percent of the FHA’s entire portfolio of $725 billion mortgages will end up in foreclosure – and FHA agrees . It is predicts that the FHA will require a taxpayer bailout within two to three years. Yet, they continue to push the bad money out the door as the behest of Barack Hussein Obama and his minions in Congress like Barney Frank and Chris Dodd.

One reason defaults are soaring is they are lending to homebuyers who haven’t saved enough to make down payments. Loans with little or no down payment (no owner investment) have high rates of loss is because the borrower has little or no financial stake in losing their homes to foreclosure.

The FHA requires a minimal 3.5 percent down payment – far below the 20 percent now required by private lenders.

Many borrowers have been able to avoid that minimal level of l investment in their homes. Obama’s administration is enabling these buyers to put up no cash at all allowing them to get advanced payments of the $8,000 homebuyers tax credit through arrangements with nonprofit housing groups and state housing agencies. The tax credit can be used the same way to pay closing costs.

Beyond the loosened standards on down payments, the FHA remains willing to make loans to people with low credit ratings, even those with histories of default, foreclosure or bankruptcy. Those with histories of default are far more likely to default again.

.

The FHA has a program that will help people who missed two or three payments under such duress by using the insurance fund to make those payments for them and then recouping the money when the property is sold – a provision that has been used in about 400,000 cases so far and could help to bring down the foreclosure rates on loans that go into default as a result of the recession. In other words, don’t even pay your mortgage, Obama’s boys will pay it for you! This is deceptive and covering up bad loans.

The agency also is considering tightening standards for borrowers who pose multiple risks, such as those with histories of default. Sure they will, after the FHA is in such trouble that Obama will have to once against use OUR money to bail them out!

Responsible lending would spoil the housing recoverybecause the FHA has effectively replaced subprime lenders who went bust. They’re under pressure by Barack Hussein Obama to prop up housing prices, and are insuring heaps of risky loans.

The FHA’s backers in Congress, led by House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat Congressman, maintain that high default rates are the price of Congress’ decision to use the FHA to prevent a complete collapse of the housing and mortgage markets in a time of extreme distress. What does he care, not at all just as he didn’t care when Fannie and Freddie went broke!

By keeping affordable loans flowing, particularly to the growing ranks of first-time homebuyers, the FHA has been critical to our nation’s economic and housing market recovery.

But even some liberal housing advocates say the FHA’s spectacular expansion is worrisome.

Given the huge ramp up in its lending in a very short period of time, it seems unlikely that the FHA has been able to adequately scrutinize the loans that it is buying.

While any bailout of FHA likely would be small the crippling of the FHA as a lender would be another blow to the housing market and would be a serious political blow to efforts to ensure access to mortgages for moderate-income families.

RWD

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October 19, 2009 - Posted by | 2010 elections, 2012 Elections, Blogroll, Congress, corruption, Democrat, economy, House, Liberal Democrat, NOBAMA, Obama, Political, POLITICS, President, Senator, Socialist, stimulus package | , , , , , , , , , , , ,

4 Comments »

  1. […] the original post here: Obama's Congress is Giving Easy Money to Un-Qualified Home Buyers … Share and […]

    Pingback by Obama's Congress is Giving Easy Money to Un-Qualified Home Buyers … | Newarticletoday.com Blog | October 20, 2009 | Reply

  2. FHA has been getting a lot of bad press lately. – definitely bad bad press. You did a great job explaining your insights. Thanks for a great review.

    Comment by eLearning tools | October 20, 2009 | Reply

  3. That’s a great deal for FHA Housing Loans, this past few months, FHA loans are getting a really bad press. so it’s about time to make a move like this.

    Comment by Robert James | October 20, 2009 | Reply

  4. We only believe what we hear and read. We sometimes don’t know the real story. We could only hope that the government is indeed doing its best for the welfare of many. Thanks for sharing this. By the way, I know a real estate coach who could also help many in the real estate industry make money despite the current crisis.

    Comment by Janney | October 20, 2009 | Reply


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