All About FHA: A Bumpy Ride Gets Worse…

Okay so it appears that the FHA has 4.4% reserves ‘insured’ for potential losses, yet 14% of their loans are late. They repeatedly ‘assure’ us they will not require a taxpayer bailout, yet UBS and RealtyTrac project mortgage losses escalating through 2011 and FHA is at last count approx 25% of the mortgage market…D-E-N-I-A-L? Or is there enormous pressure perhaps,  to push back any oncoming bailout until the dopey health care bill gets rammed through?

Diana Olick Realty Check:

Someone get me the smelling salts, because I’m shocked, yes passing out over the latest headline from the FHA: “Officials Anticipate Annual Actuarial Study to Show Capital Reserve Ratio Dropping Below Congressionally-Mandated 2 Percent.”Read news story here.

The writing has been on the wall, in red, for a good long time. Last Tuesday, on this very blog, I wrote: FHA Claims It Won’t Need Bailout.

When I put the question of undercapitalization to FHA officials last week, they sent me this very complicated statement, which you can go back and read, but which starts by saying they would not comment until they receive the actuarial study. Today they say said study is “being completed.”Sept. 30th, I’m told, is the due date.

Last week they told me the same thing they’re saying today, that they are undercapitalized, but still okay.(Except last week they said they hold more than 5 percent of their insurance in force. Today they put that at 4.4 percent.)

“To be clear, the fund’s reserves are sufficient to cover our future losses, so the FHA will not require taxpayer assistance or new Congressional action,” said Commissioner David Stevens in a statement this morning. “That said, given the size and scope of the FHA and its importance to today’s market, these risk management and credit policy changes are important steps in strengthening the FHA fund, by ensuring that lenders have proper and sufficient protection.”

Ok, so why won’t they need a bailout? Next paragraph:

“FHA’s congressionally mandated capital reserve ratio…measures excess reserves above and beyond projected losses over the next 30 years. FHA continues to hold more than $30 billion in its reserves today, or more than 4.4 percent of it insurance in force.”

And the upshot is they will HAVE to tighten standards to avoid the losses (because we are, as Kudlow said just this morning on The Call, repeating the exact steps that led to the housing collapse). That will pressure the housing market recovery (albeit for excellent reasons).

At MiM we always say, take the loss and move forward! The incessant attempts to avoid cyclical recessions always, always leads to a bubble and a BIGGER downturn than we would have if we just let the business and economic cycle naturally ..well cycle!

When this lending standard tightening goes into effect we predict ACORN and Co. will scream until Barney Frank (D-MA) writes more legislation that either turns all the homes into subsidized low income rental housing, or forces more lending below GAAP underwriting standards, reinflating the bubble. And this is without even touching the Team TOTUS plan to remake FANNIE and FREDDIE which they have not yet revealed. So buckle up for a bumpy housing ride!

September 18, 2009. Tags: , , , , , , , , , , , , , , , . Celebrities, Economy, Film, Finance, Foreclosures, Housing, Obama Administration, Politics, Popular Culture, Suspense, Unemployment Statistics, Wall St. 4 comments.

Fed Begins Second Treasury Buyback – Bloomberg

UPDATE: Rick Santelli reporting it w as 7.5 Billion Fed bought today..more Monday….

REFI MY PRETTIES!! REFI LIKE THE WIND!!!

THIS is what is going to get us back on our feet, betcha Ben and the Fed got tired of waiting for Timmeh and TOTUS to do something, LOL. They seem to have taken the reins in hand, yay! I am floating  my app., waiting to hit 4.5%., if my current rate was over 5.5 I would refi NOW baby!!!

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Treasuries launched their second round of buying as reported by Jon Erichman of Bloomberg News. (Bloomberg News)

Mix created by TruculentFairy

The Beatles “Everybody’s Got Something to Hide(Except for Me and My Monkey”)/Wizard of Oz mix

more about “Fed Begins Second Treasury Buyback – …“, posted with vodpod

March 27, 2009. Tags: , , , , , , , , , , , , , , , , , , . Economy, Entertainment, Fantasy, Film, Finance, Housing, Music, Obama Administration, Politics, Popular Culture. 1 comment.

Case-Shiller Index released…worse than expected…home values drop 18%…

and the beat goes on….

That’s no ordinary twister folks!

That is falling housing prices…Kudlow used to play this clip and laugh at A Gary Shilling who called this crisis for what it was in 2005..no one is laughing now….how many people can afford to take a 50% drop in their home values? In Phoenix we are there already….the only good news I can see in this report is surely Team Obama will MOVE on housing NOW…(hey don’t call me shirley…)

Professor Blitzer of S & P reporting live on CNBC says 11 of 20 cities across the country are in record declines…

Via Marketwatch:

Prices fell 3.4% in Phoenix and 3.3% in Las Vegas in November. In the past year, prices were down 33% in Phoenix, 32% in Las Vegas, and 31% in San Francisco.

-snip-

Falling home values have helped to plunge the global financial system into chaos because of mortgage-backed securities. Home owners have lost trillions of dollars of wealth

CNBC:

Prices of single-family homes plunged a record 18.2 percent in November from a year earlier, indicative of a housing market that is still in the throes of a deep recession, according to the Standard & Poor’s/Case-Shiller Home Price Indices.

The composite index of 20 metropolitan areas fell 2.2 percent in November from October, S&P said in a statement on Tuesday. The depreciation on a month-over-month basis was slightly worse than expectations based on a Reuters survey of economists.

-snip-

The freefall in residential real estate continued through November 2008,” David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, said in a statement.

Why Case-Schiller Index matters to you courtesy of the Examiner:

…If you want to understand the Case Shiller index better, I recommend the multimedia graph set up by the New York Times. It shows each individual city, and looks back to 2001, so you have a better perspective on how prices have trended, instead of just hearing the year over year or month over month number. This page is dedicated to the index….

This economy will NOT improve until housing is addressed, period. Get to it Team Obama….

Here is Gary Shilling telling us what was coming in November of 2006…taking heat from Bulls like Luskin and Kudlow…note the DOW closed over 12,000 in this clip from 11/27/06….as they discuss Goldilocks economy and laugh at Gary Shilling’s warnings about the housing bubble…not laughing much now….

January 27, 2009. Tags: , , , , , , , , , , , . Economy, FDIC, Film, Finance, Foreclosures, Housing, Labor Department, Obama Administration, Politics, Popular Culture, TARP, Unemployment Statistics, Wall St. Comments off.

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