Don’t Look Too Carefully

by Peter G. Miller
February 5th, 2008

HUD has a new approach to FHA mortgage numbers: Misdirection.

According to HUD’s 2009 budget summary, “in August 2007, the Bush Administration introduced FHASecure as a refinance option for subprime borrowers who have good credit histories but cannot afford their current payments. While still very new, the FHA has already helped more than 75,000 people refinance who are current or past due on their home loans. By the end of 2008, the FHA expects this program to assist more than 300,000 families in total. More than 1,200 FHA-approved lenders are already using FHASecure to rescue borrowers from the potential loss of their home. Since September 2007, more than 180,000 conventional borrowers have applied for FHASecure refinanced loans.”

Reading this statement the average person would never guess how the “current or past due” numbers divide. Here’s a clue: just a few hundred delinquent conventional borrowers per month have been able to refinance with the FHA Secure program.

What started as a program to save borrowers with toxic loans is a total flop. Instead of just saying it’s not easy to save vulnerable borrowers, HUD has made the FHASecure program “successful” by counting any conventional loan applicant with at least one lung.

The point, of course, is that the country has a massive foreclosure problem which is at the heart of our current financial difficulties — not the only economic problem we have, but a big one. If FHASecure isn’t working, then we need to change the program so it has greater value. Unfortunately, there won’t be change as long as HUD claims the FHASecure is now successful.

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