We've all become familiar with Fannie Mae and Freddie Mac--and their place among those who contributed to our current financial crisis. Now let's take a look at the Federal Housing Administration (FHA), shall we? Seems once Fannie and Freddie got into way-big trouble, the FHA stepped up to fill the no money-down, low-income federally-backed mortgage business (like Fannie and Freddie, the FHA does not make mortgages, it buys them).
Now it seems the default rate at FHA is on the rise fueled in part by a lack of oversight by the agency and the rise of mortgage brokers who are either unfamiliar with or blatantly not following the agency's rules--problems that are clearly inter-related. Of interest here is the large number of loans that are being defaulted upon without even a single payment being made, which industry experts indicate is a sign of fraud or misrepresentation somewhere along the line.
One would think the FHA would be particularly sensitive to the qualifications of potential home-buyers in this time, and that its inspectors would look askance at applications from homebuyers who trip the "likely to default" alarms.
This problem isn't going to work itself out until we dismiss the growing notion that homeownership is a human right, and that everyone ought to own a house. People who live day in and day out one or two paychecks away from financial crisis ought not be homeowners. Renting is not dishonor.
Sunday, March 8, 2009
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1 comment:
When well over half the workforce at FHA has been raised under the mindset that owning a home is just one of many government-sponsored entitlements, do you really expect them to enforce the kind of oversight and discipline you suggest?
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