Peter G. Miller
June 29th, 2009
I keep reading allegedly-helpful articles and blogs which compare FHA loans to subprime lending, as if the two were the same.
FHA and subprime loans are not the same, not even close.
Part of the thinking, such as it is, behind the comparisons is political and philosophical — some folks are opposed to the FHA for the very simple reason that it’s a government mortgage insurance program which competes with mortgage insurance companies in the private sector. This is the moment when you hear talk, oh my, regarding socialism when the more important issue is that the FHA program has helped insure some 34 million loans since 1934.
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Peter G. Miller
June 22nd, 2009
We have been pointing out for some time that all the clamor and commotion regarding the FHA reserve fund is largely nonsense.
It’s true that the FHA reserve fund has fallen in the face of larger claims, but it’s also true that the FHA has given away billions of dollars to the Treasury Department, money that comes from borrower insurance premiums. If anyone believes that the reserve fund should be enlarged then surely they must also believe that the FHA should not be forced to give away premium dollars.
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Peter G. Miller
June 15th, 2009
A lot has been made of the $8,000 tax credit and how it can be combined with FHA financing to buy a home with nothing down.
If you would dearly like such an arrangement to be widely available, that just isn’t the case today and won’t be the case tomorrow.
To understand why, you have to look at several realities.
First, the FHA is insistent that homebuyers purchase with 3.5 percent down, money which must come from either their own pocket or in the form of a gift.
Second, you can only use the tax credit for a downpayment when the money is advanced to you by a state housing agency or an approved nonprofit. Otherwise the tax credit will go into your bank account sometime after your purchase.
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Peter G. Miller
June 8th, 2009
The announcement that the Securities & Exchange Commission has charged former Countrywide CEO Angelo Mozilo with securities fraud is hardly surprising. Whether fair or unfair, Mr. Mozilo has become the public face of the mortgage meltdown, a position he will now get to defend in court.
The Securities and Exchange Commission alleges that Mozilo and two other former executives had engaged in “securities fraud for deliberately misleading investors about the significant credit risks being taken in efforts to build and maintain the company’s market share. Mozilo was additionally charged with insider trading for selling his Countrywide stock based on non-public information for nearly $140 million in profits.”
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Peter G. Miller
June 1st, 2009
FHA loans with no money down? You have to admit that HUD has an interesting idea.
On May 11th HUD posted an official notice for lenders saying that first-time borrowers could apply their $8,000 tax credit toward downpayments. This sounds good at first, but if you look closely at the policy it raises some complex questions.
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