The housing disaster that affected, not only the United States, but also the entire world has left many reeling, yet the issues that caused that fiasco are still with us.
Which leaves one to ask, did the housing crisis ever really go away? And the ugly truth is, no, it hasn’t. It’s like a hibernating bear that, once awoken from its winter slumber will emerge from its cave ravenously hungry. Remember that little thing call “The Community Reinvestment Act?” Well, it was never repealed. Even though Fanny and Freddy are lying stone cold dead, FHA picked up the “Humpy Dumpty” ruins of the failed mortgage industry, but even Uncle Sam can’t put that one back together again. Because not only is the egg shattered into a zillion pieces, it’s rotten to the core as well. And who wants to be around that stink?
But that hasn’t stopped the hucksters from selling the American dream of home ownership. And these are the hucksters of the worst kind, our very own Congress. And the truth is that the Federal Reserve can’t print money fast enough to stop the ship from sinking.
Here’s what the Wall Street Journal reported:
“The Federal Housing Administration is expected to report later this week that it could exhaust its reserves because of rising mortgage delinquencies, according to people familiar with the matter. That could result in the agency needing to draw on taxpayer funding for the first time in its 78-year history.
The FHA guarantees fewer mortgages than either Fannie or Freddie, but it now has more seriously delinquent loans than either of the mortgage-finance giants. Overall, the FHA insured nearly 739,000 loans that were 90 days or more past due or in foreclosure at the end of September, an increase of more than 100,000 loans from one year ago. That represents around 9.6% of its $1.08 trillion in mortgages guarantees.
The FHA’s annual audit estimates how much money the agency would need to pay off all claims on projected losses, against how much it has in reserves. Last year, that buffer stood at $1.2 billion, representing around 0.12% of its loan guarantees. Federal law requires the agency to stay above a 2% level, which it breached three years ago.”
In other words, I think we’re going to need a bigger boat!