FHA Mortgage Guide

During the past few days The Washington Post has run an interesting-series of front-page articles looking at the mortgage crisis.

This is great stuff but it never quite gets to an important point: There was no FHA mortgage meltdown.

Fewer FHA loans, yes — after all, how could the staid, old-fashioned FHA program compete with mortgages which required nothing down and little meaningful financial disclosure.

But an FHA meltdown? Didn’t happen.

By sticking to its standards, the FHA has been an oasis of financial sanity.

The reason we have so much financial chaos today is not because poor people needed loans and the mortgage community graciously created “affordability” products to boost homeownership, it’s because regulators failed to limit the widespread use of products which were both plainly defective and highly-profitable. The mortgages manufactured in the past few years were needed as feedstock to sell securities on Wall Street; they made possible tax-producing home purchases and they were at the core of vast lender and brokerage profits.

No one said anything because lousy financing was the golden goose of the mortgage world. But FHA mortgages were not so golden. They required appraisals, real money down and lot of documentation. In a financial environment that moved with electronic speed, FHA loans were as modern and progressive as manual typewriters.

For the full series in the Washington Post, please see The Bubble.

Check out these FHA resources for more information

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