At the forefront of the Senate Banking Committee's hearing yesterday were talks of reforming Fannie Mae, Freddie Mac, and FHA.  But since it is unlikely that anything will be done to reform Fannie Mae, and Freddie Mac before the election, the talks mainly centered on FHA.

The concerns with FHA is that their portfolio has grown from $500 billion to $1.3 trillion in loans, and that it will not be able to withstand anticipated loses over the next fiscal year.  This increased loan amount represents over 20% of all new mortgages, and there is fear that this increase is not being managed wisely.  FHA is required to keep a 2% capital ratio buffer, and right now it is under that percentage.  That means that if we have the number of anticipated defaults in the coming year, FHA could find itself in need of a $50 billion to $100 billion bailout from the Treasury.  That means more money from Taxpayers to cover the loses.

Congress missed its chance to reform Fannie Mae, and Freddie Mac, and now finds itself in a very difficult position to do so, so there is concern that the same mistake is being made with FHA.  None of us have a crystal ball to look into the future with, but we do know that if we don't correct the mistakes of the past, then we will surely repeat them again.

 

*************************************************************************************

 Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

 
This post has been included in Connecticut Real Estate News
Post is included in group: Real Estate Rookie
Post is included in group: Realtors®
Post is included in group: Mortgages
Post is included in group: The FHA Mortgage Group

12 Comments on Senate Banking Committee Raises Concerns With FHA

MAY
05
2012
517,593 Points Outside Blog Called Shot Master

We moved the problem from the Private sector to government when we used FHA to get out of the mortgage meltdown.
5:18am • #1
1,950,410 Points 478 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

I believe that the artificially low MIP for many years is what led the FHA funds to be in deficit.  Now, they want to recover overnight.  It took years to get the insurance fund in the condition it's in and if they keep piling on the FHA costs to buyers, it will take longer to recover.

The best thing they can do is NOTHING.  Give the fund time to recover.

 
5:22am • #2
730,389 Points 15 Featured Posts Outside Blog Called Shot Master

George, there is no quick fix. As Lenn (#2) stated, "Give the fund time to recover."
5:51am • #3
815,201 Points 13 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Great post and very good comments !!! MIP just keeps going up and MAY NOT BE TAX DEDUCTABLE in 2013 !
6:03am • #4
985,144 Points 106 Featured Posts Localism Sponsor Outside Blog

FHA has had problems for a long time. One year they're about to dissolve and in financial ruin, next year they are saved. I do wish they would focus on Fannie Mae and Freddie Mac.
8:10am • #5

Again...we are set up for failure so we can watch our dollar slowly become worthless for the next generation.
11:19am • #6
653,443 Points 9 Featured Posts Outside Blog Called Shot Master

You woul think this would start to turn around soon as the market turns but I suppose there are a lot of tight buyers that lost equity and now still losing their homes.
1:40pm • #7
1,352,282 Points 42 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

George - I don't know how they're going to find a solution quickly. It took time to get here.
10:44pm • #8
MAY
06
2012
494,996 Points 29 Featured Posts Outside Blog Called Shot Master

FHA is not the only thing that HUD does. A number of these things are a money drain, however FHA is it's largest revenue producer. I don't see anything happening to FHA.
3:36am • #9
MAY
07
2012
413,687 Points 88 Featured Posts Localism Sponsor Outside Blog Called Shot Master

FHA is art of the glue holding our market together...hope that it stays stable and continues to fund loans.
6:17am • #10
422,315 Points 16 Featured Posts Called Shot Master

Seems like we just never run out of opportunities to use our tax dollars to fund incompetent foreclosure administrators.
11:53am • #11
228,204 Points Outside Blog Attended Rain Camp Called Shot Master

George -- at the rate FHA is raising the Upfront and Yearly Mortgage Insurance rates, it appears that they will soon be pricing themselves out of the market, as more people find it is cheaper to go conventional or just put down a larger down payment.
1:43pm • #12

Login or register to leave a comment
 
George%20souto%202013-1a Rainmaker_large

George Souto

Middletown, CT

More about me…

George Souto NMLS# 65149 FHA, CHFA, VA Mortgages Connecticut

Address: One Liberty Sq., PO Box 1000, New Britain, Ct, 06050

Office Phone: (860) 573-1308

Cell Phone: (860) 573-1308

Email Me



Listings

Links

Archives

RSS 2.0 Feed for this blog