Elsewhere in Washington, the Federal Housing Administration quietly admitted yesterday a $4.6 billion loss. The FHA, the government’s mortgage financer and insurer, is suffering unexpectedly high default rates on home loans. Gasp! Can you believe it?!
The FHA has found its own special way to put its business in jeopardy: the seller-financed down payment mortgage. That’s when the seller covers the buyer’s down payment and then adds the payment to the total price of the loan… an awesome way for people with zero capital and horrible credit to own a home.
Who would have thought these wouldn’t pan out? Not the FHA… seller-financed down payment mortgages account for over 30% of their loan portfolio.
FHA officials announced that it had to extract over $4 billion from its measly $21 billion capital cushion to cover the losses. “No insurance company can sustain that amount of additional costs year after year and still survive,” admitted FHA chief Brian Montgomery. “Unless we take action to mitigate these losses, FHA will soon either have to shut down or rely on appropriations to operate.”
The FHA has found its own special way to put its business in jeopardy: the seller-financed down payment mortgage. That’s when the seller covers the buyer’s down payment and then adds the payment to the total price of the loan… an awesome way for people with zero capital and horrible credit to own a home.
Who would have thought these wouldn’t pan out? Not the FHA… seller-financed down payment mortgages account for over 30% of their loan portfolio.
FHA officials announced that it had to extract over $4 billion from its measly $21 billion capital cushion to cover the losses. “No insurance company can sustain that amount of additional costs year after year and still survive,” admitted FHA chief Brian Montgomery. “Unless we take action to mitigate these losses, FHA will soon either have to shut down or rely on appropriations to operate.”
No comments:
Post a Comment