There was an in-depth report tonight on the CBS evening news.
The topic was FHA loans and the fact that 8.5 % of them are in foreclosure or are more than at least 90 days delinquent. The story went on to say that FHA has been proping up the housing market.
- The FHA has been insuring half of all new mortgages since 2007.
- FHA has loans out currently worth 696 Billion
- The lenders shown in the story were :
- Great Country Mortgage Bankers
- Madison home equities
- TB & W
- These were all lenders that have been said to be problem lenders that have had their plugs pulled from FHA and are no longer able to write FHA loans.
- The story also went on to talk about federal prosecutors are suing one of the fastest growing lenders Lend America. It was said the company made up and invented borowers incomes and information to close loans.
A former investigator for the Department of Housing and urban dev. called it FHA insurance armageddon.
He says in the next 18 months there is going to be a major hit to the FHA insurance fund. Projected losses released by FHA for the future could leave it with 4 billion dollars in total which is less than the 2 % required by congress to keep in the fund at any time.
Number of FHA loans on the books
2007 = 425,000 loans
2008 = 1.2 million loans
2009 = 1.8 million loans
Fewer than 200 staff members at FHA to handle all of these loans and do checks on the lenders using FHA money and audit loan applications.
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Wow, interesting piece. I'll have to check it out. Thanks for the post.
I saw that. Sounds like FHA is about to become a basket case. I've done appraisals for Lend America. At least I can say that they never pressured me, and that's a rare thing these days. Unfortunately, they got scared when HVCC went into effect, so I lost their business overnight.
It just keeps piling up doesn't it. I wonder why FHA is propping up the market there. It is so easy to fix, why can't anyone see it.
I agree that there should have been more lenders removed not only from FHA lending, but should have had their licenses permanently revoked. Always more laws, and less people to enforce them.
One ramification of this is that FHA may have to radically change the way they do business. Chances are underwriting will be tougher and low down program may go away or become very restrictive. For what it's worth, this is a good reason to motivate your FHA borrowers to get busy while current programs are available.