Gretchen Morgenson: Study Shows a Pattern of Risky Loans by F.H.A.

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Gretchen Morgenson: Study Shows a Pattern of Risky Loans by F.H.A.

Gretchen Morgenson: Study Shows a Pattern of Risky Loans by F.H.A.

NYT-

A new and extensive analysis of 2.4 million loans insured by the Federal Housing Administration in recent years shows a pattern of risky lending that could generate $20 billion in losses and harm thousands of the nation’s most vulnerable borrowers. By ignoring risks in loans it insured in 2009 and 2010, the study concludes, the F.H.A. is imperiling both borrowers and taxpayers who stand behind the agency.

The analysis emerged less than a month after the F.H.A.’s auditor submitted a troubling report on the financial soundness of its insurance fund. In mid-November, the auditor estimated that the fund, which backs $1.1 trillion in mortgages, has a value of negative $13.5 billion. In other words, if it were to stop insuring loans today, the F.H.A. fund could not cover the losses anticipated on loans it has already insured.

[NEW YORK TIMES]

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2 Responses to “Gretchen Morgenson: Study Shows a Pattern of Risky Loans by F.H.A.”

  1. Sarah says:

    Risky loans by Banks perhaps? Sure, let’s blame the accomplice, that’s fit to print.

  2. Charles Reed says:

    Sarah you are always on point. I wrote Gretchen today again, and told her that before 2007 over half the FHA loans were under 620, and somewhere in 2008 until 2009 the FICO scores actual went from 621 to 692 as they got better not worst.

    Since she been so hard in denying that there was not a FICO score requirement for a government loans, with I argued with her over a 1 1/2yr ago time frame. She has a hard time letting go that the borrowers were responsible.

    She still on this (sold to her ideal) you had to put down 20% in order to be responsible, however I just told her if that was the case then VA loan would have never made it because they don’t put money down in most cases.

    However what killing all programs is that right now in America there are 22 million working age people out of work. And what crazy is these experts act as if there was not this widespread unemployment, that was cause by the subprime crisis.

    These experts are talking about equity position when the average household is thinking about a flat steady monthly payment. What hard for silver spoon kid to understand is that the lower working class is set up for life with making a payment that fits.

    As the lower class workers by used car and are always underwater because they cannot afford a new car and get the hand me downs from the richer class.

    I believe that the experts have made this crisis worst in telling people that they need a principle reduction and that they are in this underwater position and informing people how to strategically default. So people felt their position was bad and started to miss 3 payments and apply for a modification and made thing even worst.

    What part of it does not matter what you owe as long as your not trying to sell, because one day you will be right side up. Poor people are accustom to being upside down because we been abused for years buying what we could afford, and those vehicle would more than likely last as the payment, so you ended up rolling the left over amount into the new payment.

    The experts are in need of talking to the ground zero mortgage loan officers as to what was actual going on and not some Ben Bernanke Great Depression theory of “Let just recapitalize the Banks”

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