So much for cutting spending and bashing the Democrats for fiscal irresponsibility. Guess what your congressional Republicans did today? Voted to increase the FHA loan limits in select areas from $625,500 to $729,750. The housing industry made a huge push for this bill and believe it or not, was very disappointed the legislation did not include Fannie and Freddie loans. Senators Cochran and Wicker and Representatives Harper, Nunnelee, and Palazzo voted for the increased loan limits.
What was it they said about Louis XVII? Forgot everything and learned nothing? Apparently we don't have enough exposure since the government backs over 95% of the mortgage market. These guys voted to put you, the taxpayers, on the hook for more exposure.
The Wall Street Journal editorial page had a few things to say about this boondoggle:
"The National Association of Realtors is lauding this idea as great for housing "stability," by which it means that the taxpayer subsidies for its industry will keep coming, even for fancy homes. The median sales price of existing single-family homes nationwide in the third quarter was $169,500, according to the Realtors's own data. Politicians from higher-cost regions argue that higher loan limits are needed, but even Los Angeles has seen median prices fall to $324,800 from $402,100 in 2008—well below $729,750.
This FHA payoff to the housing lobby comes as the agency has had to publicly reveal the extent of its financial travails. In its annual report to Congress Tuesday, the Department of Housing and Urban Development and an independent auditor reported the FHA has a 0.24% capital reserve, well below its statutory 2% minimum for the third year running. Take $1.1 trillion of outstanding loan guarantees divided by $2.6 billion in capital reserves and you get a 422-to-1 leverage ratio, up from 33-to-1 in 2009. By this standard, Lehman Brothers was risk-averse.
So how much would a bailout cost, even before the proposed loan-limit increase? University of Pennsylvania real-estate finance professor Joseph Gyourko noted in a paper last week that FHA "systematically" underestimates future default risk, not least because it lends to borrowers with very little equity in their homes and uses rosy economic assumptions. Mr. Gyourko estimates that FHA is "materially underreserved by at least $50 billion, with the true figure likely higher."
These numbers are no surprise, given FHA's inherently risky business model. It provides 100%, explicitly taxpayer-backed mortgage loans to first-time, moderate- to low-income borrowers. Down payments can be as low as 3.5%, at a time when most private lenders are prudently insisting on 20% after the housing bust. In fiscal 2011, 85% of FHA loans had a down payment of less than 5%.
Like Fannie and Freddie, the housing collapse hit FHA hard. The difference is that the FHA has since become the political class's main substitute for the private subprime lending it once encouraged. As subprime lending vanished after the crash, FHA became the major lender for marginal borrowers. The share of new mortgages it insures has risen to 24% in July, the latest data available, from 6% in 2007.
In September, FHA said it had 635,096 seriously delinquent loans, or 8.7% of its portfolio, up from 8.4% the prior year, and 8.3% in 2009. When we first questioned the FHA's rapid loan expansion in 2009, then FHA Commissioner David Stevens lectured that there was nothing to worry about. Acting FHA Commissioner Carol Galante still claims the fund is "actuarially sound," which makes us wonder what an unsound fund would look like. ..."
Article
There is one word for these so-called conservatives representing us in Congress: sellouts.
Thursday, November 17, 2011
Mississippi Republicans sell out to housing lobby
Subscribe to:
Post Comments (Atom)
18 comments:
The interest of the common man or woman is no longer represented in State or Federal Government.
Only the rich and big business are represented now. Unless you have money to contribute to the political campains of the politicians, then you are shit out of luck.
Even the highest court in the land has ruled that corporations can now give an unlimited amout of money to political campains, and remain anonymous while doing this.
Wall street and the filthy rich now run this country.
Medical insurance companies and the oil companies ( along with every other corporation ) keep raising their rates, screwing people over when people are already hurting, and they continue to raise their prices, even though they are making billions and billions in profits. This country is all about greed now, and it will continue this way until people wake up and do something about it.
But the politicians in office now have so much political power, and the corporations buy air time to brain wash people with their stupid commercials, and the people believe what they are told, just like sheep to the slaughter.
Well, just keep voting republican, and see if the situation improves.
If socialism is the answer for protecting the common man from those whose greed is destroying the middle class, then I will gladly be it's supporter.
Why is this a sell out? This may help some be able to refinance and keep their home loans without defaulting. All seriousness where is this a sell out. The housing industry has pulled this nation out of every recession/depression this country has ever been in, historically speaking. We need a serge in the housing industry to get the economy moving. Just curious your thoughts KF. Thanks.
We don't need to do anything that encourages borrowing money. It was lending and the housing industry that killed the U.S. economy. I think the word your were looking for is surge. There is no "housing industry." Only a mortgage industry.
If socialism is the answer for protecting the common man from those whose greed is destroying the middle class, then I will gladly be it's supporter.
Supporter and fool.
Realtors and homebuilders have powerful lobbies, and Republicans have a pro-business bias. I also believe that Congress needs to be more circumspect when considering bills that have the potential to put us right back in the mortgage-backed securities soup, but I'm not surprised when Republicans vote for a pro-business bill. Our delegation probably saw this as something that wouldn't directly impact Mississippi, and they now are owed favors from the Congressmen who were pushing it. That's politics... Bill Billingsley
Just another failed attempt by our goverment to jump start an economy by regulating something they have no clue about.
Don't get your feathers too ruffled, the impact of this will be minimal at best. Just like the loan modification and the tax credit, neither of which meant a hill of beans to the economy.
Thye can raise the loan limits all they want but if the borrowers don't qualify it doesn't matter.
With rates being down I have people call me everyday needing to refi. Problem is most of them don't qualify with the stricter guidelines. Funny thing is as bad as I need the business, I know this is the right thing. People have to get back to living within their means ( I know it's a novel idea).
Not surprised. The history of the Fannie Mae and Freddie loans has been misrepresented by the GOP. Easy sell since the base would assume anything for the lower income group would be Democrats. Everyone should read Paulson's book. Wasn't the lower income who profited, indeed, they were always going to get screwed...no home with foreclosure, no equity, ruined credit...how is that good?Obama tried to fire the head of Fannie and the Republican Senate saved his a^^.
Read Paulson book. Also look at who profited from the insider information that the economic sh** was about to hit the fan.
Everyone needs to stop being naive about their party.
Everyone needs to stop being naive about their party.
What is naive is believing that others -- in your case "everyone" -- are naive.
Thanks for playing.
What was it they said about Louis XVII? Forgot everything and learned nothing?
Learned nothing and forgotten nothing. A great line.
But that was Louis XVIII; # 17 died in horrid captivity during the Revolution.
8:31 is correct...no impact.
I agree - why is this a "sellout"? Yes, raising the limits won't allow 'everyone' to refinance, just as is noted above if you don't qualify you can't refinance with these higher raters.
BUT IF YOU CAN qualify, you can refinance. In other words, if you are a good credit, you can finance at these new limits and it can at least help get those units either refinanced or off the market.
What's wrong with this? It has absolultely nothing to do with cutting spending, KF. This is not a spending bill. You and your buddies that want to make something out of everything are trying to bash these votes as "selling out" and "fiscal irresponsibility". I would agree it would be bad policy if it was increasing limits for people that can't pay off the loans - i.e. the housing "boom" of the last decade. But with the new lender's look at their loans, this doesn't cost the government money and it doesn't mean lending to people that can't pay. It does allow good folks with good credit to qualify for FHA loans.
If you want to do away with FHA, I'm for it. But as long as it exists, the rates need to be kept up with the times, just as they have been for the past 50 years.
I am an intern at the Gingrich Group ($37 million proves that when we talk and interact people listen TM) and I've been instructed to respond to this jackassery with some of our own. Between fiscal irresponsibility, Republican sellout and Louis the XVII this is the kind of history Newt likes to remind everyone about. He is always ahead of the curves and reaching back to claim credit where credit might be claimed. That is why your recent post and some of the comments got our attention. He has talking points written out and we just use whichever are appropriate. Like Newt always says, you always know what Newt will do, he is a known quantity. So our response follows:
My name is Newt Gingrich and I'm running for President. I took nearly $2 million from Fannie and Freddie but I never lobbied or influenced or peddled or both. What part of "direct Newt interaction" don't you understand? Some of my opponents are criticizing this, but all the voters who are voting for me know that I am the smartest candidate on the right side of the aisle.
I criticize cronyism and influence peddling by my opponents, but when these same hypocrites accuse me, then all my supporters know sour grapes and hypocrisy when they hear it. For a smart guy like me $2 million is not nearly enough to get my serious attention. Did I forget to tell you that I make a lot of money with my history and prediction scams in addition to being so smart that everyone knows it?
Now for a history reminder. Has anyone else made the types of efforts I did as Majority leader? I proudly claim all of the good things and disclaim any responsibility for the party ending up in the ditch. It really wasn't my fault the party ended up in the ditch. I warned everyone I shouldn't be running things but no one listened. My flagstaff was flying too high where it shouldn't have been, and my patriotism was surging where it shouldn't have been. It won't happen again again. Callista has repeatedly warned that this marriage had better be different than all the others. And if my patriotism gets out of control again, she'll make like George Washington and the cherry tree and my flag won't have a pole.
Back to those government monopolies looted by insiders. I took some of the money they spent, but I was really trying to help them out. I was advising them about history and warning them the shit was about to hit the fan. I am smart. I am sure to be upwind of all the lucrative fans at all times. I gave generic advice is another excuse that I sometimes use to explain what I did to justify taking nearly two large from Fannie and Freddie.
Some additional excuses might be needed. The Gingrich Group ($37 Million proves that when we talk people listen TM)would like to think that Newt was out of town and out of touch when this bill was being written. Newt and his most recent wife and were probably actually out of the country.
washingtonscene.thehill.com/in-the-know/36-news/5743-arianna-huffington-bumps-into-newt-gingrich-on-amalfi-coast
Depending upon when the bill writing and lobbying was going on, this is why it's not his fault either.
www.nationaljournal.com/dailyfray/newt-gingrich-39-s-secret-mediterranean-cruise-looks-delightful-20110607
Newt is down at Tiffanys paying his bills off, so contact the Gingrich Group if you have any more questions about how it is done in Washington. I'd like to also remind influential elites and quasi private government monopolies that the Gingrich Group is booking availability for "direct Newt interaction" beginning after Super Tuesday. Signed Gingrich Group intern. (We can't use our real names because Callista is always suspicious of direct Newt interaction).
Chip Reynolds has just made an entrance
Who is Chip Reynolds?
Ole Bill has introduced the word circumspect in his latest offering. It's near the word circumcise in the dictionary.
9:31 am. The word THEIR explains the word EVERYONE as those who identify themselves with a political party . It's not EVERYONE in the universe.
2:35pm KF had a story about Linda Peach Harmon's house selling for over $900000, which was over twice the market value. The appraiser and real estate agent got their fraudalent percentages.The mortgage officer was rewarded in the short term for bringing in a big loan and the bank had a $900000 asset on its books.
The appraiser should appraise a property for the accurate market value. The banks should lend based on that value and the ability of the borrower to meet the loan agreement. That way, if the unforeseen happens, the bank and its shareholders still have the asset and the loss is only the interest. The borrower has a chance to try to sell the house himself at market value and not be financially ruined before foreclosure takes place. The bank has a chance to sell the asset.
We have already rescued those who profitted from a corrupted process. Refinancing the loans for those who could pay off the amount with a lower MONTHLY payment makes sense if they are willing to pay more for a house than it is likely to be worth in the foreseeable future to be home owners and not devastate their credit. The mortgage holders that invested get their money over time. The buyers have a place to live and can continue a normal existence and in time can recover some of their money.
The crooks that created and profitted from an artifically inflated market aren't being punished but apparently aren't satisfied and want the gravy train to continue.
The homes shouldn't have been appraised at such high values and the loans should never have been made to those who couldn't afford them.
Why is this hard?
The appraisal was forged on that deal. No appraiser got paid.
Good, KF, so who did profit?
I think, my point, isn't lost entirely with an example wrong on one detail. And, appraisers in other deals did profit.
Even when the market was good and working, who you got to do the appraisal for your loan affected how much money you could borrow. Shopping appraisers was common.
Post a Comment