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  • Housing Downturn, Part 2 0 comments
    Sep 4, 2009 12:28 PM

    Perhaps today's article in the WSJ (
    will begin to bring attention to this problem.  The FHA has grown significantly since the housing turmoil commenced and its' market share is now almost 25%.  They are experiencing delinquencies and foreclosures reflective of the overall market.  FHA reserves against losses are declining to a statutorially set floor of their overall guarantees.  One point about which the article's author is slightly off involves the statement that the FHA did not follow private lenders in loosening standards.  That misses the point that the FHA has generally been a subprime lender all along.  People who obtain an FHA wrap traditionally had trouble qualifying by Fannie and Freddie underwriting standards.

    How will the housing sector and the economy rebound if one of the recent bulkwarks against further declines needs to tighten it standards?  Will the public stand still for another bailout? 

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