The Federal Housing Administration is in deep trouble. According to its 2012 annual audit report, the FHA’s economic value or capital position is negative $13.5 billion. For the fourth consecutive year, the FHA has failed to meet its congressionally mandated minimum capital standard of 2 percent or $23 billion. One in six FHA loans are delinquent 30-days or more, and this number is growing. These new findings should be cause for significant concern to Congress and taxpayers. Monitor FHA’s position here through Ed Pinto’s FHA Watch series and learn what needs to be done to right the FHA’s listing ship.
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By banning filibusters of most executive-branch and judicial nominations, the Democrats have done historic damage to the Senate. This will have long-term consequences for the nation, but the most significant initial fallout will likely be the confirmation of Rep. Mel Watt (D., N.C.) to head the Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae and Freddie Mac.
Notwithstanding the recent collapse of our government dominated housing finance system, the housing lobby is once again trotting out the usual arguments for all-encompassing federal guarantees: All homebuyers should be able to obtain high-loan-to-value mortgage loans on all houses in all areas of the country in all market conditions.
The FHA’s mortgage insurance practices qualify as predatory under the definition set out by the FDIC inspector general. The reasons for this qualification include overcharging of lower-risk borrowers, the FHA's counting on borrowers' lack of understanding of FHA insurance, and the FHA offering abusive loan insurance terms to high-risk borrowers.
Editor’s Note: In a recent “Eye on the Market” outlook, Michael Cembalest of JP Morgan cited the work of AEI Resident Scholar Ed Pinto as forming the foundation of the analyses used in “The Course of Empire”: a retrospective on the US housing crisis
The National Association of Realtors has been steadfast in its support of subprime loans and undeterred by the loans’ demonstrable harmful impact on working-class families and neighborhoods. But the safe operation of the US mortgage market over the long term depends on the preponderance of loans being prime—loans with a low risk of default under stress conditions.
The market is concerned about the Federal Reserve's scaling back its aggressive bond purchases. Barron's asked Alex Pollock when and why the Fed will begin to taper.