Federal Mortgage Insurer Headed Toward Collapse
By Evan Mantyk
Epoch Times Staff The Federal Housing Administration (FHA) is deeply insolvent and headed toward a financial crash like that of Freddie Mac and Fannie Mae in 2008, according to analysis from the American Enterprise Institute (AEI) released last week.
“We are watching—in not-so-slow motion—the same gradual descent into insolvency that occurred with Fannie and Freddie a little more than three years ago,” reads the outlook for FHA authored by Edward Pinto, an executive vice president and chief credit officer for Fannie Mae until the late 1980s, and Peter J. Wallison, a general counsel of the U.S. Treasury Department during the Reagan administration.
If you have tried to buy a home in recent years, you know that 20 percent is typically the required amount for a down payment on a mortgage. The only way to get around that is an FHA-backed loan, which requires as little as 3.5 percent down.
The jump from 20 percent to 3.5 percent may seem like a boon to homebuyers, but it is also telling of a system warped by government intrusion.
The FHA was set up during the Great Depression with the noble sounding goal of offering low-income Americans the chance to own a home, but today has morphed into something else entirely. With the powerful National Association of Realtors lobbying behind it, the FHA now offers loans up to $729,750—obviously much higher than the price of a regular low-income family’s home.
“It is laughable to suggest that a $729,750 mortgage is a loan to one of the low-income buyers that the FHA was mandated to help,” according to the outlook.http://www.theepochtimes.com/n2/united- ... 81641.html