jswede

Is the FHA a Bailout Waiting to Happen?

check Denninger's Market Ticket today -- latest data:

22.9% of all FHA loans are either delinquent or in foreclosure....

incredible considering that they used to have VERY conservative lending standards, as noted above....

Is the FHA a Bailout Waiting to Happen?

they USED to. not anymore. they don't even publish the FICO scores of their borrowers anymore....

consider that and the fact that they are doing 95%+ (going to 125% ?) ltv loans, they bumped their 'max' loan size up by nearly 3x to ~$720k, and you have yourself a subprime shop at the expense of the American Taxpayer.


On Sep 21 11:45 AM KingGeithner wrote:

> This article propagates a lot of the incorrect criticism about FHA
> loans. FHA purchases actually have substantially more red tape to
> clear than other mortgages, more documentation requirements on personal
> finances, and higher credit scores requirements.

Is the FHA a Bailout Waiting to Happen?

the quality is CRAP. see my post above. it's crap - they are taking all the 'problem loans' and making 'mod' loans to somehow save these bad apples.... that and 1st time buyers is 95% of the FHA volume.... 95% loan-to-value and up.

FHA is NOT doing higher quality -- FHA is the administrations last gasp 'solution' to falling home prices - they are taking most ANY borrower.... their old, conservative lending guidelines are LONG gone...

On Sep 21 11:36 AM Kansas City Shuffle wrote:

> Don't get me wrong, I love quoting the cheesy Green Street Hooligans/West
> Ham song as much as the next guy (Roger Knights)...but this article
> has nothing to it. There is some good data available on this and
> there is nothing data-wise in this article. Although FHA has jumped
> from nothing to a huge part of the market, in complete antithesis
> to your argument, the credit scores of their borrowers are actually
> vastly improving because you are getting the higher quality that
> usually could get private insurance. So saying they are screwed based
> on large volume ignores the quality of the volume.

Is the FHA a Bailout Waiting to Happen?

here's a look at a random Aug 2008 GNMA security -- $417 million original size; 465 loans in the pool. Loans made at 92% Loan-to-value.

Delinquency Status #Loans Percent Loan Amount
30 days Delinq Loans 41 8.48 20,473,322
60 days Delinq Loans 26 5.23 12,626,825
90+ days Delinq Loans 81 17.41 42,033,082

reminder, this is 1yr later. 30% delinquent. This is typical. losses will be paid entirely by the taxpayer.

Bill Ackman's Plan to Save Fannie and Freddie

he was alone - and dead on - about MBIA about 5 years before anyone else even listened.

and I'd hope he talks his book - that's what any good manager will do. you don't have to listen