The Next Mortgage Crisis
By Kurt O'Keefe, Detroit Consumer Attorney on Nov 25, 2008 in Mortgage Issues, Uncategorized
Thought all we had to do was get through this sub-prime crisis? (Michigan bankruptcy attorney Kurt OKeefe has blogged on this issue many times.) Hit bottom, start the turn around?
In a stunning Business Week cover story, the authors reveal that many of the crooks who profited from the sub-prime crisis are back marketing FHA mortgage loans.
Not to worry, FHA loans are highly regulated, right?
According to Business Week, for 2008, 60,000 FHA loans in January, 140,000 in September.
FHA staff about the same as five years ago, 1,000 employees. Less than a year and a half ago, there were 16,000 FHA licensed lenders. There are now 36,000.
FHA used to be the way to go for lower income borrowers. It fell by the wayside in the days of easy money, as brokers, motivated by greed, steered people into sub-prime and Alt-A loans.
Now that the sub-prime well has run dry, FHA loans are spiking. Oregon bankruptcy attorney Kent Anderson has examined FHA versus sub-prime loans.
The examples in Business Week are striking. People getting FHA approval for a mortgage payment equal to 58% of their gross income, when 31% is supposed to be the maximum.
Maximum FHA mortgage amounts go up to $625,000 in January, 2009, from $362,790.
Not sure why the taxpayer is subsidizing people buying $625,000 homes.
The bottom line? Another $475 billion of mortgage loans created by government interference in the mortgage market. Wonder who will be asked to foot the bill when this next wave of bad loans defaults?
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