Next bubble collapsing? FHA in trouble?

[WhiskeyGirl]

...as if we matter. We do not - we are the minority. I am done preaching ... I am just going to report and laugh at ourselves as we spread our wings as a full fledged Ponzi scheme Banana Republic.

Enjoy the read... and get your wallets out. You are paying for these people to buy homes today, and in 2-5 years you will be paying for the 2007, 2008-2009 (and 2010) vintage homeowner to be bailed out. I want to introduce you to whom you are sending your money to as we prepare for the next iteration of the housing bust.

...1 in 5 loans made in 2008 via FHA are ALREADY IN TROUBLE. 1 in 4 loans made in 2007 via FHA are ALREADY IN TROUBLE. We are not even 3 years into these mortgages. This is EXACTLY the same data we were presenting in 2007 about subprime loans! And Alt A's! And Option ARMs!

Remember those? Probably not - because they are stashed as "AAA" securities on the Federal Reserve balance sheet. Not to worry - all these 2007, 2008, 2009, 2010 failures from FHA will soon be joining them.

Now keep in mind, each of those loans that are already defaulting passed through the hands of our oligarchs ... and they collected a fee, a big one, as they orignated each one. Just as in 2003-2007 they DO NOT CARE if the mortgage will be good. Why? Because in 2003-2007 they could sell those mortgages to suckers the world over via securitization. Now? There is one sucker who buys these... who? Look in the mirror. It's you. Common thread? There is STILL no reason for our oligarchs to make good mortgage loans... they win. Again. We've fixed nothing.

Is this the 'we have no consumer exposure' crowd?  The same ones that make fees?  Privatized profits, socialized losses?

Where is the change?  Who's looking out for Main Street?

Next case...

Chaz Fullenkamp, an automotive technician in Columbus, Ohio, got an F.H.A. loan even though he was living on the financial edge.
“If I got unemployed, I’d be wiped out in a month or two,” he says. Thanks to the F.H.A., however, he is better off than he used to be.

Again... no financial cushion? No problem. Fire up the 4 AM infomercial.

Mr. Fullenkamp used F.H.A. insurance to buy a house this spring for $179,000. The eager seller paid the closing costs and also gave Mr. Fullenkamp $2,500 in cash. He immediately applied for the $8,000 tax rebate. Even taking his down payment into account, he came out ahead.

That's right! Better than renting! Money is free in America... I don't know where it comes from, but I just know the government hands it to me as if it burns a hole in their pocket.

So what are your final thoughts Mr. Fullenkamp?

“I knew in my heart I could not really afford the house, but they gave it to me anyway,” said Mr. Fullenkamp, 22.
“I thought, ‘Wow, I’m surprised I pulled that off.’ ”

Read more here - http://www.benzinga.com/24596/nyt-fha-problems-raising-concern-of-policy-makers


I wonder how many of these seller bought the homes in 'bulk' for pennies on the dollar?  Pure profit?

[WhiskeyGirl]

This housing problem reminds me of Al Bundy and a dollar.  In one show, Al went to the nudie bar with his dollar.  After spending it at the dance floor, he used a string to retrieve it.  He did this over and over with the same dollar.

1.  The mortage originators, write these mortages which are backed by taxpayers. They earn fees. 

2.  Over time, vast numbers of these loans go into default, and taxpayers get stuck with the houses and bad loans.

3.  These houses are sold in bulk lots, for pennies on the dollar.  The buyers remain secret, the prices paid remain secret (iirc). 

4.  These bulk buyers of homes put the homes on the market. 

5.  Start over with step #1. 

A home is sold multiple times, to buyers that are poor risks.  Taxpayers get stuck with the home, bad loans, and sell in bulk for pennies.

Taxpayers get poorer, and mortgage originators and bulk buyers make out like bandits.

When will it end?

Another Al Bundy show involved getting change with a dollar.   Al puts in a dollar, gets change, and then pulls the dollar out of the machine as it is attached with a string and duct tape.

Taxpayers are like the machine - they keep losing.  They dispense money and lose the dollar.

When will it end?

Who buys all those houses for pennies on a dollar?

If those mortgage companies had to take financial responsibility for the loans they originated, would they be more selective?

If they didn't get paid until the loan/house was paid off, not refinanced, would they be more selective?

What kind of capitalism continues to pay like a sweepstakes, and when bad things happen, continues to pay?

Crony capitalism?  Job rotation?

Who's looking out for taxpayers?