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Federal Housing Administration Commissioner David Stevens says there are no problems with FHA and that concerns about the organization needing a bailout are overblown. Steven’s was speaking at the National Association of Realtors’ annual conference.

The bulk of the concern for the agency largely comes from the diminishing agency reserves. As of September 30, 2009 the reserves ratio has fallen to 0.53%. The ratio required by congress for the agency is 2%.

Stevens credits the reserve requirement as a major factor in keeping the agency from falling victim to the same issues as Fannie Mae and Freddie Mac. I say, while that may have been true then, what about going forward. Now that the reserves are so low what happens 6 months from now?

17% of FHA loans are at least one payment behind or in foreclosure while that number is 13% across all mortgage loans. Given the rising unemployment I am not seeing the turnaround the agency needs to keep it’s hands out of the taxpayers pocketbook. FHA may have tightened up the guidelines a bit recently but there are still a lot of loans out there for a lot of people having a really hard time in this economy.

It doesn’t matter what made up number the president cites in the 10 times a week he puts himself on TV, the jobs situation is a nightmare and getting worse. Housing and mortgages will continue to be a problem until more people are working in real, sustainable jobs and that is the unvarnished truth.

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Related articles

• Will the Housing Agency Need a Bailout? (time.com)
• FHA Boss: FHA Is Not the New Subprime (abcnews.go.com)
• The FHA’s Bailout Warning (online.wsj.com)

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It looks like Fannie Mae is getting into the rental business. They are instituting a new program where, if you qualify, you can hand over your deed but continue to live in the home and pay rent. I say, what a great idea! I heard this idea being talked about at least 18 months ago but better late than never. It strikes me as a win-win situation. It gives a person time to deal with losing their house and doesn’t displace the kids.

You probably didn’t end up in foreclosure and lose the house because you forgot to pay the mortgage. It is very challenging for families in that situation find alternate housing and cover the expenses of moving. Fannie Mae’s rental program is also good for their bottom by keeping money coming in from the property. It is refreshing – and unusual – for the government to get it right. I would also bet that if this program goes well, there may be a buyback option offered down the line.

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Related articles

• Fannie Mae offers borrowers option to foreclosure (sfgate.com)
• Fannie Turning Borrowers Into Renters (hsh.com)
• Leasing back your house after foreclosure (fresnobeehive.com)
• Fannie Mae to Allow Borrowers to Lease Homes (nytimes.com)

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Fannie Mae reported a $19 Billion loss in the third quarter and is asking their boss, the government, for $15 Billion to keep their head above water. The third quarter numbers bring the total to $111 Billion in losses since the government took over in September of 2008. Let’s say it together now – WOW! Between the health care debacle, crap and trade, stimulus, tarp, etc. it would appear to me that the only one actually losing their shirt is the taxpayer…

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Related articles

• Banks Choosing Treasury Bonds Over Loans (blogs.wsj.com)
• So, Paulson lied? He’s misled America from Day One (michellemalkin.com)
• Treasury denies Fannie Mae tax credit plan (sfgate.com)
• Fannie Mae Seeks $15 Bln in US Aid After 3Q Loss (abcnews.go.com)
• Fannie Mae posts $19 billion loss on bad loans (money.cnn.com)