O.K. It is a complicated topic, but one thing is clear.  The banking environment is tying up the entire country.  Not only have they made massive layoffs to lower to mid income employees rather ruthlessly, with no severance or keeping employees on payroll for a short period.  Not to mention hugh bonuses to already over compensated CEOs.  They now want to tie the hands of the American public and bankrupt the entire country, with tighter lending requirements, flooding the marketplace with inventory and therefore diminishing pricing because of basic supply and demand.  While the banks are working with some homeowners on modifying their mortgages, they are forcing more conservative values from appraisers and agents/brokers who do broker price opinions.  Thus, creating lower prices and a loss of equity to surrounding homeowners who are current on their mortgage and are being responsible. 

We need to lobby strongly, especially those on a commission based salary. While there are some charlatans amongst us, most mortgage consultants/brokers/agents work very hard for their income and are ethical?   We are struggling while the banks get richer, we know they have the reserves to lend.  Regarding FHA, those products need to be available to buyers who miss the unreachable marke of lending institutions because of prior irresponsible lending. 

Let's fact it in the "up" years, brokers/agents marketed and sold homes, mortgage consultants/banks did the lending and the loan ended up on an underwriting desk.  It was and still should be at that point that a sensible lending decision was/is made.  They have created this environment along with the variables of rising living costs, high unemployment.  There is no loyalty to the American public only the almightly dollar!

I Thought the change to FHA mortgages is not to new loans but to refinanced loans closing cost, that  is the refinanced loan  could not roll in financing charges into the new refinanced loan. Right?

None of the concerns with FHA is going to matter whether they are solvent or not.  Wall Street and too many numerous Lenders to mention, all had 100's of loan programs all trying to reach for a bigger piece of the pie since 2002.  Bundling toxic assets and selling them as AAA rated securities was a crock from the beginning and has gone on with deregulation of this facet of the business since the Clinton years. 

The issue now is not an FHA problem but the lack of all governmental agencies related to financiing and housing that if we did not act immediately as Paulson announced 12 months ago our economy would collapse in a week. Bush threw money at the problem, Obama has thrown money at the problem.  But still we sadly do not know the actual depth of the toxic market.  They are in every marketplace and city in the nation literally millions of dollars of "shadow inventory" that are toxic assets that most industry people are not aware of. 

The commercial market is on the cusp of collapse.  And in our neck of the woods, there are hundreds if not thousands of incomplete new construction projects that sitting and the lenders are not moving to sell the product.  Most are deprecating assets now that we are entering the fall and winter months, sitting and rotting. Still no urgency by the banks to sell them?

The governmental agencies never took the time upfront to accurately investigate the depth of not only sub prime loans that were ultimately going to go into default, but even more importantly the Lenders and Banking Institutions were not honest or upfront with the amount of loans that were ultimately going to head into default. They didnt want a run on their companies if they actually told the truth and these problem loans were all new construction related.  

I agree if FHA does not stay in the game it will cut off 50% plus of all loans that we are seeing now.  But that is only a part of the real problem.  If we do not get a handle on the depth of the problems in the residential re-sale market, the commercial markets, and the in complete new construction market, none of what has been discussed above will matter. It will be utter chaos.

Most Banks still have not even disclosed the depth of their riskier loans, unless the FDIC has come in and place a cease and desist order on them.  Until we have transparency on the total number of all troubled financial assets across the nation and have some game plan as how these troubled loans and assets will be dealt with and absorbed into the market via investors, speculators, home buyers the markets will continue to see a continuing and on going supply of foreclosed properties of all types.  Thus driving down real estate prices across the board, This downward trend will continue for the next two to three years.  Federal agencies will continue to over react, continue tightening lending and they will continue to throw more and more money at the problem.  And it will come to a point where the citizens of this country will say no more.  We will need to let some of Banks go down and will see the number of failed banks go from the 90's this year to well over the high 200's plus in the next calendar year. 

The more banks that go down the better.  FNMA and Freddie Mac were both po'd that the sub prime markets were taking their loans and decided to jump in as well.  They are as responsible for the collapse as the sup prime lenders themselves. 

The conventional market has to loosen up its qualifications to attract more buyers.  They can do it without taking on undue risk.  As usual in Washington, when a crisis hits, (like 1990) every governmental agency has this knee jerk reaction and over compensates.  FNMA/Freddie Mac.  which makes the market further constrict.  In a period of 6 months we went from zero pre-sale requirements, to 25%, to 50% to 71%.  Even if the financing was still the same and only the pre-sale requirements for Condominiums were raised as they did, it would eliminate sales and create problems.  Couple that with 20% down loan and a 675 plus credit rating and what did they expect.  It has the effect of a strangle hold on housing.  Simple over reaction from our government. 

FNMA and Freddie Mac had never taken on and allowed for the type of speculation that went on in many new hi rise condos either.  All the rules were changed to get a bigger piece of the action and to encourage speculators.  What a frickin joke.  I couldnt believe what I was seeing when they changed non owner occupied to levels never heard of before. 

Anyway I am rambling and really pissed off.  This couldnt have been averted but it certainly didnt have to hit the level that it is today if our government would have got in front of the problem than trail it and then try to throw money at the banks to solve the issue they allowed to have happened.

The conventional market needs to offer 10% down loans.  They need to loosen the credit scores slightly.  Underwriters need to do their jobs and be allowed t make loans that make sense.  FHA has to be here for us as a tool.  Commercial Bankers that were loan officers and lent on crappy new construction projects in questionable neighborhoods, to naive builders with little experience ought to thrown out on their arses.  However they are now Asset managers instead.  WTF? 

This may have already flushed itself out in other parts of the country, but Seattle last week was ranked as the no.1 city with the highest amount of new construction defaulted loans (New York Times).  Hopefully it is a local problem and the balance of the nation is not the same.  However a few months back the San Francisco Chronicle had an article about lenders in the area that were purposely keeping 20% of their bank owned property off the market.  It is the same here.  And if it is true nation wide, we are in trouble. 

All of us need to voice our opinions not just to the NAR but to the congress and the senate as well.  This would be the place to start.

1.  We need the banks to get real and deal with getting property off their books.  Thus speeding up the consistent stream of foreclosures. We will not see any increase in pricing, unless we end the supply of troubled assets.

2.  We need accountability.  How bad is the problem and how deep is it.  Then get the qualified real estate professionals involved to move the product. Move some to affordable housing, other to market rate housing, just do something and get real Asset managers with experience and authority.

3. Loosen conventional loans to meet the needs of the public.  Not increase risk, but offer a real product for solid buyers. 

4. Keep FHA intact. 

Sorry for the rant, anger, and confusing message.  I didnt know I had so much to say.  It is time for Realtors to unite. It is time for us to have our voices heard.

"the Federal Government's lack of control starting with Reagan, going though Clinton, and finished off by the last Bush."

You may want to rethink your timeline Joe.

CRA was put into place under Carter, it went missing and uninforced under Regan,went back into gear under poppa Bush,Was double down by Clinton and saw ACORN suing lending institutions for not lowering their standards by who else?(Prince Obama) then the situation was continued under baby Bush til 2003 when the administration wanted congress to look at it along with Fannie and Freddie and again in 2005 as McCain tried to bring legislation to the floor wich was blocked by Democrats.

Not a big G.W.B fan anymore or McCain for that matter but facts are facts

The Government has been Wrecking the housing industry for a long time both party's but Leave Regan out of it!! it was the first time we veered off of the socialist track for years.Now it seems like we are rushing back in that direction at light speed.

So sad to see that the "Government Take Over" talk is dominating intelligent people. FHA IS THE GOVERNMENT - It is the FEDERAL HOUSING AUTHORITY!!  Everyone keeps stating how they want the government out - out out! It's WALL street and DEREGULATION that got us into this mess in the first place. There are $15 Trillion dollars worth of mortgages in the country and Fannie and Freddie own $3-5 Trillion of them, so who owns the rest??? Hmmmmm...not FHA! 

FHA is not going anywhere and it's already a Government Agency - so please people, think before you write. Please don't be sheeps, baaaa baaaa with the rest of the heard. Do your own research.

If you want the government out of your lives, then you must go live in a hut or cave. No roads, no schools, no post office, no police, firefighters, no social security, no FHA, no Deparment of Transportation, no Department of Agricultur, Education, Office of Interior, Justice Department, NO ARMY, NO AIRFORCE, NO NAVY, No CIA, DEA ,,,,,,,,,,,

If you leave up up to PRIVATE industry then you get $52 trillion of bad investments that Wall Street issued globally and brought the world to it's knees. It bankrupted Iceland and devastated pensions and 401k's. The government could have NEVER done this. And now it's up to the Government to try to keep things going along.

If it wasn't for FHA our industry would have collapsed. And just incase you forgot, FHA releases their guidelines, but the BANKs have overlays that surperseed FHA. So at the end of the day, the private banks determine lending guides, not just FHA.

Did you read the entire letter that Dave Stephens sent out? Here's an excerpt;

 "To be clear, the fund's reserves are sufficient to cover our future losses, so the FHA will

not require taxpayer assistance or new Congressional action," said Commissioner Stevens.

"That said, given the size and scope of the FHA and its importance to today's market, these risk

management and credit policy changes are important steps in strengthening the FHA fund, by

ensuring that lenders have proper and sufficient protections."

I can only imagine what a blog like this would look like in 1982 when interest rates were 18% to 22%; now that would have been fun.