FHA-Backed Loans, Subprime, and Fraud - Is it Happening All Over Again?

Here we go again, it looks like the same sharks, just another ocean. As reported by BusinessWeek - "FHA-Backed Loans: The New Subprime"?

The same people whose reckless practices triggered the global financial crisis are onto a similar scheme that could cost taxpayers tons more.

As if they haven't done enough damage. Thousands of subprime mortgage lenders and brokers—many of them the very sorts of firms that helped create the current financial crisis—are going strong. Their new strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of modest means.

You read that correctly. Some of the same people who propelled us toward the housing market calamity are now seeking to profit by exploiting billions in federally insured mortgages. Washington, meanwhile, has vastly expanded the availability of such taxpayer-backed loans as part of the emergency campaign to rescue the country's swooning economy. - (BusinessWeek)

There seems to be no end to the corruption. The tool to fix one problem is the door to another. In fact, if there was any question in your mind as to how this financial game of life is played, simply have a look at what's transpired over this past year in terms of the economic bailouts handed out by our government. How's your pocketbook?

Capitalism not at it's finest!

FHA - The Only Game in Town?

As reported by Realty Times:

"The country's top housing official has an urgent message for potential home buyers: You may have heard that the credit markets were 'frozen,' but FHA has been open for business throughout the credit squeeze, and so are Fannie Mae and Freddie Mac. In fact, FHA's volume has tripled and the agency is now insuring well over a hundred thousand new loans a month.

In an exclusive one-on-one interview with Realty Times, Housing and Urban Development Secretary Steve Preston said that FHA, Fannie and Freddie -- who account for a combined 90 percent plus share of the entire U.S. mortgage market -- 'have kept liquidity alive' for home buyers -- and have virtually unlimited funds for new mortgages.

'There is no credit crisis' for individual home buyers who have at least three percent to put down, documentable employment, and at least a moderately good credit record, said Preston."

We might add that we're definitely noticing this trend with our real estate projects. A major contributing factor is that FHA still only requires a minimal down payment which continues to enable a market that would otherwise no longer exist in consideration of our current credit environment.