Amazing how very stupid the people who manage our money really are:
FHA-insured loans have more than tripled from 530,000 in fiscal year 2007 to 1.7 million thus far in 2009. The Government National Mortgage Association, which securitizes FHA loans, has boosted its mortgage-related issuance to $287 billion from $85 billion.
Yet during that same period, the FHA’s loan delinquency rate has climbed to 14.4% in Q2 from 12.6% two years earlier.
Adding to the concern, the FHA’s fund to cover losses has dropped to a projected 3% of insured loans. That’s a leverage ratio of 33-to-1, the level banking giant Bear Stearns was at before it failed.
At a time of rising unemployment, the FHA is lending money as if its boom times – anyone see anything wrong with this? Of course you do. Unless you’re a liberal, of course.
This does explain the so-called bottoming out of the housing market. Via the FHA, funds are being made available for loans all other banks are unwilling to fund due to the risk of the borrowers and the pressures of the overall economy. Once again, our tax dollars at work – stupidly, and for the benefit only of insiders. But the bottom created by this upsurge in FHA loans is false – the rising delinquency rate shows it to be a fraud. We’re lending money – essentially, taxpayer money – to people who shouldn’t be borrowing at the moment. When you loan to people you shouldn’t, you end up with high default rates.
And the worst part about is that since FHA is government-banked, it can actually go on longer with this sort of thing, thus making the eventual crash worse when it comes. Now, a wise President would pull up the reigns on FHA and tell them to knock it off…but that would kick out one of the “green shoots” Obama is using to convince us that all is going well. Adherence to Obamunist fairy tales is to be placed firmly in front of the well being of the American people over the long term.
Get ready for Crash II: I figure it for March, but it could come at any time over the next two years.
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