Is This The Whole Story?

by Peter G. Miller
February 3rd, 2008

FHASecure has been in the news recently. Judge for yourself if this new-fangled FHA loan program is being fully and fairly described.

First, testifying on Capitol Hill, Under Secretary for Domestic Finance Robert K. Steel appearing before the Senate Committee on Banking, Housing and Urban Affairs to discuss “Foreclosure Prevention and Neighborhood Preservation” http://www.treasury.gov/press/releases/hp792.htm”>said the following:

“In addition to outreach, new affordable mortgage solutions are being developed to help homeowners. On August 31, the Administration announced FHASecure to offer homeowners foreclosure alternatives; since then, over 75,000 Federal Housing Administration (FHA) insured loans have been closed putting over $10 billion to work. In addition, it is estimated that about 100,000 more applications are in the pipeline.”

Meanwhile, in Florida, HUD Secretary Alphonso Jackson said that “compared to exotic subprime loans, government insured loans through FHASecure offer reliability and affordability. FHASecure, which refinances mortgages that are current or past due, has been able to assist over 76,000 Americans since last fall, including nearly 3,000 in Florida. FHASecure will help 300,000 families nationwide by the end of this year.”

With Mr. Steel, you will notice he first mentions FHASecure and then switches gears and does NOT claim that FHASecure has produced 75,000 new loans.

Mr. Jackson takes a different approach. He says FHASecure has been used for refinancing by more than 76,000 conventional borrowers. He certainly does not say, as HUD figures show, that only 171 delinquent conventional borrowers were able to refinance with FHA financing in the first 15 days of December.

The argument is made that the FHASecure program is being used to promote FHA loans in general. That’s fine. But when you have a discussion regarding foreclosures and preserving neighborhoods, and when your news release says that Sec. Jackson “highlighted HUD’s FHASecure product and other efforts put in place by the Bush Administration for homeowners who need helping staying in their homes,” then the whole story is not being told.

Plainly more than 171 borrowers needed help during the first two weeks of January. Plainly the purpose of the FHASecure program was to bail out borrowers in danger of losing their homes. Merely refinancing with FHA loans – loans which have been absolutely available to conventional borrowers with good credit for decades — does not meet the announced purpose of helping people who face foreclosure.

Who knows and who cares?

*People getting notices from their lenders saying pay up or move out.

*People who are paying their mortgage and yet the value of their homes are falling because properties down the street are being lost to foreclosure.

*People with no mortgage who today have less equity because houses in their neighborhoods have been financed with toxic loans that cannot be refinanced under the FHASecure program.

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