FHA Finances More Purchases Than Fannie and Freddie COMBINED

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Eventually, the excessively high loan limits that FHA permits in high cost areas will subside, slowly but surely, which will incourage more privatized residential financing.  With that comes less compliance/documentation/paperwork. 

Clearly, a lot of those things are necessary to prevent a totally toxic portfolio, but the private sector is a little less militant when it comes to crossed T's and dotted I's.  Anyone in the business now knows that some of the most minute issues can hold a loan up for weeks.


FHA Home-Financing Volume Sign of ‘Very Sick System' (Update2)

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By Jody Shenn and John Gittelsohn

May 24 (Bloomberg) -- Loans guaranteed by the Federal Housing Administration, the U.S.-owned mortgage insurer, may be involved in more home-purchase transactions than borrowing financed by Fannie Mae and Freddie Mac.

FHA lending last quarter may have topped the combined volume of government-supported Fannie Mae and Freddie Mac in a home-lending market that's still a "government-financed market," David Stevens, the agency's head, said today at a conference in New York, citing research by consultant Potomac Partners.

"This is a market purely on life support, sustained by the federal government," he said at the Mortgage Bankers Association conference. "Having FHA do this much volume is a sign of a very sick system."

The FHA, which backs loans with down payments as low as 3.5 percent, insured $52.5 billion of home-purchase mortgages in the first quarter, compared with $46 billion of purchases of the debt by Fannie Mae and Freddie Mac, according to data compiled by Washington-based Potomac Partners.

The FHA and Fannie Mae and Freddie Mac, which regulators seized in 2008, have been financing more than 90 percent of U.S. home lending after a retreat by banks and the collapse of the market for mortgage bonds without government-backed guarantees


FULL ARTICLE HERE - http://www.bloomberg.com/apps/news?pid=20601206&sid=amJbN2aGCF84



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Ann Sabbagh
Seacoast Mortgage Corporation, RI (20021119LB & 20031576LL), MA (MC2107) & CT - Pawtucket, RI
President, Sr. Loan Officer

Jeremy, USDA loans also are helping the come back.  The funds dry up and the government needs to ensure the funds keep coming or we will never get out of this mess.  Thanks for the post.

May 29, 2010 10:19 PM #1
Jeremy Cohen
Infinite Title Solutions - Fort Lauderdale, FL
Infinite Title


Excellent point.  I was researching USDA as I received your comment.

I'm originally from Providence, by the way, how are things at Seacoast? 

Email me if you'd like.  I'm just curious how business is in my home state.

- Jeremy

May 29, 2010 10:29 PM #2
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