New Lunacy From the FHA
From Tuesday’s South Florida Sun-Sentinel:
First-time buyers and former homeowners in South Florida may be eligible for 100 percent down payment assistance through a new program arranged by a nonprofit housing counseling agency based in Hollywood. . . .
The program, backed by the Federal Housing Administration, is designed to help people who have never owned a home, as well as consumers who filed for bankruptcy or lost homes to foreclosure and short sales during the housing and financial crises from 2006 through 2011. [Emph. added.]
Let me see if I have this straight. The government has come up with program that will offer 0%-down mortgage loans to people who already have a history of bankruptcy or foreclosure. Perfect! What could go wrong?
Donald Trump may be on to something: the people who are running this country are idiots. We’ve all seen first-hand the huge social and economic costs that result from a policy of urging homeownership on people who can’t afford to buy homes. In 2008, it brought on a disaster that nearly flattened the financial system. And here policymakers seem to have learned nothing.
Rather than the government handing out taxpayer-backed no-down-payment money to people who won’t be able to pay it back, I have a better idea. Abolish the FHA. Get rid of the GSEs. Wind down the mortgage-interest deduction. Which is to say, find every inducement the government has concocted to encourage people to buy homes, and blow them all up.
Instead, the government is back to pushing mortgage money to subprime borrowers. Madness.
What do you think? Let me know!
4 Responses to “New Lunacy From the FHA”
Just invent a word to signify the opposite of ” red-lining”. How about “Ghetto Star” ? The animals have captured the zoo and will defend it til death.
I think they are mad!!!!!!!!!!
Follow the money……….always seems to be the case, who will profit most for doing this? I don’t know, but bet that leads to some of the why.
Also, doesn’t it take quite a while for the foreclosure process to play out if needed? Almost a free place to stay for those that won’t or can’t pay? Who ultimately shoulders the fall out………..taxpayers, banks……….why of course not the feds. Preposterous.
Truth is always stranger than fiction. You can’t make this stuff up!! Reverse red-lining indeed, which will only lead to buckets of red ink. What could go wrong with something the FHA is backing? You are clearly a bigot and capitalist pig for suggesting that this could in any way have a bad outcome, because you are judging these people for past outcomes that clearly could not be their fault. Personal responsibility is dead… long live the blame shifters!!
We bought our first home for $38,500 in 1984 with an FHA insured mortgage and a $500 down payment. My wife was incredulous that we could buy a home with a $500 down payment, and I told her that America was a great country, don’t ever let anyone say it isn’t (she’s Canadian).
To qualify for the mortgage, we had to adhere to strict guidelines. The monthly PITI could not exceed 25% of monthly gross income, and all debt service payments including the monthly PITI could not exceed 36,
If all subprime borrowers had had to adhere to these limits we’d never have had the subprime mortgage crisis. There is nothing inherently wrong with the FHA as long as insured mortgages are prudently underwritten, although Canada and the UK have no equivalent of the FHA and life goes on. So, keep it, abolish it, it makes little difference.
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