FHA?s default rate has grown to 7%, 13% delinquent

[GeezerMan]

Looks like taxpayers might be on the hook again for some more bailouts..

"On June 18, HUD?s Inspector General issued a scathing report on the FHA?s lax insurance practices. It found that the FHA?s default rate has grown to 7%, which is about double the level considered safe and sound for lenders, and that 13% of these loans are delinquent by more than 30 days. The FHA?s reserve fund was found to have fallen in half, to 3% from 6.4% in 2007?meaning it now has a 33 to 1 leverage ratio, which is into Bear Stearns territory. The IG says the FHA may need a ?Congressional appropriation intervention to make up the shortfall.?

Link1

Link2

 

[dphantom]

Basically, they are bankrupt.

 

[bamacre]

Sweet, more boons for the world!

 

[JS80]

This might actually be the catalyst bears were looking for.

 

[GeezerMan]

I can't see the taxpayers sitting still for another bailout, I mean a Congressional appropriation intervention.

 

[Slew Foot]

Originally posted by: GeezerMan
I can't see the taxpayers sitting still for another bailout, I mean a Congressional appropriation intervention.

Theyll sit still. And theyll like it like the sheep they are.

 

[heyheybooboo]

There s an estimated $3.275 trillion proposed for lien holder loan guarantees, and housing and homeowner programs directed at defaulting loans to avert foreclosures (through refinancing into fixed-rate mortgages) projected from 2008 - 2018.

3 things:

1) There is certain to be a direct cost for this ($250 billion ? - who knows ?) plus a 'default' cost;
2) I can see some unscrupulous sheet occurring like the "STOP THE LOOTING NOW!" link sez; and
3) There must be some very serious concerns about the economy and job outlook moving forward, and the future of housing in this country (that's 22 million homes over 10 years @ $150k/pop).

The Feds have tried and convicted a dozen or so local folks (lawyers, real estate sales and appraisers) around here (western NC) for fraud.

Beezer Homes had a number of Charlotte projects shut down before the FHA smacked them with that $50 million fine. Makes you wonder how much in 'fees' they really made, don't it?

 

[Vic]

During the boom, FHA's ~3.5% default rate the second worst after VA loans.

 

[BoberFett]

Originally posted by: bamacre
Sweet, more boons for the world!

:laugh:

 

[GeezerMan]

I think you guys mean boon for the world bankers....

 

[StageLeft]

Originally posted by: Slew Foot

Originally posted by: GeezerMan
I can't see the taxpayers sitting still for another bailout, I mean a Congressional appropriation intervention.

Theyll sit still. And theyll like it like the sheep they are.

Agree. And partly because frankly it's an easy issue to spread fud about. They don't deserve to be bailed out, but will the country be ultimately stronger for the ordeal? Who knows, surely not I.

The Feds have tried and convicted a dozen or so local folks (lawyers, real estate sales and appraisers) around here (western NC) for fraud.

A dozen, surely you're surprised that given how rampant the bubble was and how ubiquitous that there aren't far more pending trials and lawsuits looking to put people behind bars.

 

[Thump553]

Originally posted by: JS80
This might actually be the catalyst bears were looking for.

FNM's stock closed at 0.66 Friday, and had been in the .60-.75 range for awhile. It has been zooming since then, hitting $1.32 yesterday (ie, doubling your money in two trading days) before closing at $1.07. Freddie Mac (FRE) is doing even better.

Don't give up your day job just yet (assuming it has nothing to do with the stock market).

 

[BoberFett]

Originally posted by: Thump553

Originally posted by: JS80
This might actually be the catalyst bears were looking for.

FNM's stock closed at 0.66 Friday, and had been in the .60-.75 range for awhile. It has been zooming since then, hitting $1.32 yesterday (ie, doubling your money in two trading days) before closing at $1.07. Freddie Mac (FRE) is doing even better.

Don't give up your day job just yet (assuming it has nothing to do with the stock market).

Of course their stock is going up. More bailouts is a given at this point. Market forces are no longer at work in this country. The capitalists have succeeded in the ultimate transfer of wealth from the treasury to their pockets.

Why bother with silly things such as producing goods or services when you can simply extract money from the taxpayers?

 

[StageLeft]

Yeah it's not that their situation is inherently better, it's that if a bailout is more likely, then it's less likely they'll BK. Investing in this case is speculative based on the chances of the unknown, not the market unknowns or employment, but the unknown of how much and when the gov will open its endless pockets.

 

[Genx87]

This is going to end well.

 

[Thump553]

The governement already owns 80% of FNM stock (or warrants to the same). Any further bailouts will undoubtedly increase the government ownership percentage, thus making the stock worth less.

Freddie Mac (FRE) just showed a profit last quarter, the first in a long time. It sure looks to me like the stock market is betting FRE and FNM are on their way to recovery-and I place a lot more faith in that indicator than some off the cuff remarks on an anonymous forum.