FHA Commissioner Says No Problems
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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)
