FHA Mortgage Guide

The Washington Post has come out with a lengthy, detailed front-page story blasting outgoing HUD Secretary Alphonso Jackson.

“In late 2006,” says the paper, “as economists warned of an imminent housing market collapse, housing Secretary Alphonso Jackson repeatedly insisted that the mounting wave of mortgage failures was a short-term ‘correction.’

“He pushed for legislation that would make it easier for federally backed lenders to make mortgage loans to risky borrowers who put less money down. He issued a rule that was criticized by law enforcement authorities because it could increase the difficulty of detecting and proving mortgage fraud.

“As Jackson leaves office this week, much of the attention on his tenure has been focused on investigations into whether his agency directed housing contracts to his friends and political allies. But critics say an equally significant legacy of his four years as the nation’s top housing officer was gross inattention to the looming housing crisis.”

Not only does the Post criticize Jackson for major policy decisions, it also takes a swipe at HUD spending: “Jackson,” says the paper, “enjoyed a chef and a full-time security detail that trailed him to Washington social events. His office launched a new $7 million auditorium and cafeteria at HUD’s headquarters, money that some within the agency believed should have been directed toward housing for the poor. His office solicited an emergency bid to obtain oil portraits of Jackson and four other HUD secretaries at a cost to taxpayers of $100,000.”

This is all very nice but it begs a question: Where was the Washington Post at the start of the mortgage meltdown? Did it criticize HUD when it raised the ARM caps from 1/5 to 2/6 for certain FHA loans — an increase that made FHA loans more expensive and thus more risky? An increase that also put more dollars in lender pockects?

If Jackson was wrong in 2006 to okay a rule so that “lenders could endorse FHA loans without prior review and no longer had to submit loan paperwork to HUD,” what did the Washington Post say at the time?

Has the Post criticzed the constant efforts of the Bush administration to reduce FHA downpayment requirements and raise consumer costs by going to risk-based mortgage insurance for FHA loans?

The Post article does not address current claims of success with the FHASecure program, claims that are grossly inflated. Oh well, maybe in a few years after a few million more homes are lost they’ll get to it.

For the full story, see: HUD Chief Inattentive To Crisis, Critics Say, April 13, 2008

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