Mortgage Fantasy Versus Reality

by Peter G. Miller
March 9th, 2008

The latest HUD stats show that the FHA program is off to the best start since August 2003. At the rate things are going the FHA could receive 1.8 million loan applications this year.

During the first 15 days of February, HUD endorsed 38,598 FHA mortgages. This total includes 15,652 purchase money mortgages, 17,736 refinanced transactions and 5,210 reverse mortgages. At this rate more than 900,000 loans could be backed under the FHA program this year.

Alas, not all borrowers will be so lucky. Delinquent conventional borrowers — the folks HUD was supposed to save from foreclosure and bankruptcy with the FHASecure program — continued to be shunned.

In the first half of February HUD refinanced just 212 delinquent conventional borrowers. This number is actually down from the last half of January when 241 lucky borrowers were saved from the sheriff.

Meanwhile, a news release from HUD says:

“WASHINGTON – U.S. Housing and Urban Development Secretary Alphonso Jackson today announced that HUD’s FHASecure product has helped 100,000 homeowners refinance their mortgages and avoid foreclosure. Since September 2007, FHASecure has enabled tens of thousands of families – who are current on their home loans or past due because their teaser rates reset – to close on loans refinanced through HUD’s Federal Housing Administration (FHA), which is backed by the full faith and credit of the government.”

The release quotes HUD Secretary Alphonso Jackson as saying that, “FHASecure has helped more than 100,000 families stay in their homes. Homeowners are cutting their monthly mortgage payments by an average of $400 a month compared to their exotic subprime loans. They no longer have anxiety about finding foreclosure notices in their mailboxes, thanks to the safe mortgage alternative that FHASecure offers.”

In 1913 the government passed a law which forbid the spending of money for “publicity agents” without specific congressional approval. The worry was that the power and money of government would be used to manipulate public opinion with false and distorted information. (See 38, Part 1, U.S. Stat. 212)

Nah, couldn’t happen….

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