EthicalShortSales

The administration’s push to transform the FHA into an ATM….

A couple of months back I was invited to attend a round-table workshop whose keynote speaker was HUD Commissioner Brian Montgomery.  Invitees included members of NJ’s non profit default counseling orgs who peppered the tired, travelling panel about their recent acknowledgment of a ‘pending problem’ with mortgage loan resets and the increasing number of mortgage delinquencies, defaults, and foreclosures. Nationwide.

This was their NJ stop.

Of course, foreclosure is nothing new to us… on average, NJ has 15,000 mortgage foreclosures annually.  The predicted housing downturn/market correction/subprime ARM reset will only further increase an impossible workload. Experts predict that number to double this year.  And perhaps triple next year. (see A Perfect Storm)

At that time, Mr. Montgomery (an administration appointee) stated it was the administration’s goal to “reform” the FHA, and then make the FHA more competitive, modernized, and able to offer people more choices… by implementing risk-based pricing for folks with blemished credit willing to pay higher premiums.

I’m sorry, but doesn’t that sound familiar?  Isn’t that what “subprime” lending proposed and wasn’t that proximate cause to the ‘meltdown’ we (those in the trenches) have seen coming for 18 months?

I’m reading HR 1852.  Congress is putting forth legislation which will enable the FHA to help qualified families avoid loss of homeownership by offering alternative financing….  at increased loan amounts,  but with statutory caps on annual premiums.

If enacted as written, HR 1852 would result in additional ‘receipts’ for the FHA… perhaps as much as $75,000,000 which would be used to create a new Affordable Housing Grant Fund linked to increased FHA receipts.

The administration has voiced objections to this proposed legislation (diverting receipts to fund affordable housing) presumably because it needs the additional $75,000,000 to fund other pet projects…..