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Give the FHA a bailout?

L.A. Times 2012/11/16 16:48:53
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The Federal Housing Administration, which has played a crucial role in stabilizing the housing market, said it ended September with $16.3 billion in projected losses -- a possible prelude to a taxpayer bailout.

The precarious financial situation could force the FHA, which has been self-funded through mortgage insurance premiums since it was created during the Great Depression, to tap the U.S. Treasury to stay afloat. The agency said a determination on whether it needs a bailout won't come until next year.

fha housing

Read More: http://www.latimes.com/business/money/la-fi-mo-fha...

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Top Opinion

  • Tuna 2012/11/17 17:38:32 (edited)
    No
    Tuna
    +22
    That failed Democrat idea of "affirmative action mortgages" just won't go away will it? That's why the housing market will not rebound; Democrats keep propping up the bad decisions. Looks like the past four years were NOT Bush's fault, huh? miss me yet

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  • Dave 007 2013/01/20 14:49:55
    No
    Dave 007
    No.
  • bt sedlock 2012/11/27 18:43:46
    Yes
    bt sedlock
    I don't know anything about the Federal Housing Administration. But if the Housing Market ende in September with $16.3 billion in projected losses we shouldn't give it a bailout.
  • ginger 2012/11/27 17:05:42
    No
    ginger
    +1
    No more bailouts at taxpayers expense. If people want to buy a house let them get loans outside the government if they can afford to buy. If they can't affort to buy then rent until you can save a down payment and then buy. Live within your means and if this means no house ownership, so be it. It's not just the price of the house, it's the other expenses that go along with house ownership. Property taxes, insurance, upkeep, etc..
  • MS PRUD 2012/11/23 16:04:26
    No
    MS PRUD
    Enough is enough.
  • johndhutcheson 2012/11/21 21:28:30
    Yes
    johndhutcheson
    If you want to stop the rot in the economy you surely must. People with housing are fitter for work.
  • BornToBeWild 2012/11/21 17:33:18 (edited)
    No
    BornToBeWild
    +1
    The federal government overstepping its constitutional powers AGAIN! Why do we continue to allow our Constitution to be violated by this government? NO MORE BAILOUTS!!!!
  • Haole 2012/11/21 16:48:22
    No
    Haole
    +1
    It's the same as the banks. They all knew the housing crash was coming. Hell I saw it coming as early as 2005 because of the crap they were pulling, and they have people working on this that get paid to know a whole lot more about it than I did. The thing is they didn't care. If the banking industry fails we ALL fail. It's not the same as bailing out an auto manufacturer, there are literally no funds in this country that aren't dependent upon the success of the banking industry, so the (major) banks are literally TOO BIG TO FAIL. This never leaves thier mind when they are doing business. They arent as interested in the long term performance of loans as they are in realizing a profit for the specific period that they are operating in.. so they literally lend money like there is no tomorrow. Banking deregulation meant to stimulate a slow economy and expand housing to more Americans allowed them to lend money on equity that wasn't there, basically they loaned anything to anyone who asked for a loan without significant attention to the security (for purposes of conversation, the house) which ensured repayment of the loan. Rampant abuses of this situation led to some regulation being imposesd on lending related industries which made it necessary to account forr the value of the pr...




    It's the same as the banks. They all knew the housing crash was coming. Hell I saw it coming as early as 2005 because of the crap they were pulling, and they have people working on this that get paid to know a whole lot more about it than I did. The thing is they didn't care. If the banking industry fails we ALL fail. It's not the same as bailing out an auto manufacturer, there are literally no funds in this country that aren't dependent upon the success of the banking industry, so the (major) banks are literally TOO BIG TO FAIL. This never leaves thier mind when they are doing business. They arent as interested in the long term performance of loans as they are in realizing a profit for the specific period that they are operating in.. so they literally lend money like there is no tomorrow. Banking deregulation meant to stimulate a slow economy and expand housing to more Americans allowed them to lend money on equity that wasn't there, basically they loaned anything to anyone who asked for a loan without significant attention to the security (for purposes of conversation, the house) which ensured repayment of the loan. Rampant abuses of this situation led to some regulation being imposesd on lending related industries which made it necessary to account forr the value of the property on which the loan was made. The banks answer to this was to manipulate the industry to arrive at inflated values. The inflated values were then further inflated by value estimates that incorporated the average rate of the (spurious) increase in value to "project the present value using historical data, basically compare sales from six months ago adjusted at 5% per month (for instance) until the date of the estimate. So the artificial rate of the initial overvaluation was increased exponentially. The American consumer, saw the increase in the market and said "It only makes sense to buy property" People would speculate on this increase (and didn't realize it was totally unsustainable from the beginning) and they would extend thier credit as far as it would possibly go to invest in this "gold mine". The banks would GLADLY give them any loan they wanted because the banks primary business is selling todays money at tomorrows prices. The easy availabilty of capital made home values continue to skyrocket, or at least appear to.High LTV (120%+) and undoccumented loans What came about was loans being made at 120% on houses that were overvalued by as much 2 and 3 times thier actual marketable value. During this time the banks were also in the business of selling mortgage securities, because the world market, either through myopathy or just pure unchecked greed saw the gold mine of the US housing economy and likewise wanted a ride on the gravy train. So the Banks were making money on BOTH ends of the mortgage. These mortgages were sold many times all around the world and one of the more recent manifestations of this crisis is the banks inability to track down some of these mortgages because nobody knows who owns them at this point. I (obviously could go on and on about this forever there are so many levels of this crisis and the blame is mostly going to the wrong people but....i think i might write an article on it.

    Anyway, the banks didn't care that they failed because there were no consequences for failure. They knew the government had to bail them out.
    We need to re-think the way we look at the whole lending industry. Since the entire country depends on it's success the entire country will have to pay for thier failure. If it is the entire country that pays for it, it's the entire countries concern and the legislation guiding the banks processes needs to ensure that they are doing business in a way that will allow long term success. The banks need to be regulated quite vigorously. That being said although many of the articles within Dodd Frank ensure that the banks don't make loans as haphazardly as in the past, but they go too far and the lending industry is now far too restricted to the point where they can't adequately do business. The purpose for the bailout was to allow the banks to continue operating and have enough liquidity to make sufficient loans to keep the economy afloat. Although rates are as low as imaginable (too low actually) the banks aren't able to keep lending to the people that need it the most. If the banks can't lend the people can't spend (nothing promotes spending more, than having money).

    They need to fix the problem before they can hope for any significant growth within the economy. And they CERTAINLY need to address the roots of the problem before they go throwing any more money at it.
    (more)
  • Leonidas 2012/11/21 16:10:41
    Yes
    Leonidas
    Regardless of the cirumstances of its funding, because it is part of the Federal government of the United States of America, refusal to cover these losses will be viewed by the bond investment global community as equivalent to a debt default! The Treasury notes and bonds will be dumpted as fast as they can be. Treasury notes and bonds will be classified perhaps lower than JUNK bonds.
  • Tpem 2012/11/21 16:00:29
    No
    Tpem
    +1
    No one should get a bailout.
  • the fuze 2012/11/21 12:11:55
    No
    the fuze
    +3
    We just can't keep forking out the cash when there isn't any.
  • M 2012/11/21 11:23:47
    No
    M
    +2
    ...and those swindled by the government should get restitution.
  • USAF Vet 2012/11/21 09:35:14
    No
    USAF Vet
    +3
    No, but they will, with the Bail-Out-Meister-In-Chief at the helm of the taxpayer.
  • daylight 2012/11/21 07:53:10
    No
    daylight
    +3
    Are you kidding, make us pay more taxes for the stinking government robbing us in the first place??? Shame on this government,they have fail the nation by lining their pockets and their voters with the producers money...............robbers
  • maquignon 2012/11/21 06:54:33 (edited)
    No
    maquignon
    +4
    This imbecilic behavior has to stop!!! Stop bailing everybody out .
  • Tom Trojan 2012/11/21 03:35:40
    No
    Tom Trojan
    +2
    Time for people to realize that government is not the answer.......
  • scarfy 2012/11/21 03:17:49
    No
    scarfy
    +2
    NO MORE DUCKIN BAILOUTS!
  • WhereIsAmerica? ~PWCM~JLA 2012/11/21 02:12:31
    No
    WhereIsAmerica? ~PWCM~JLA
    +2
    Stop backing bad mortgages, you don't deserve a bailout!
  • tommyg - POTL- PWCM-JLA 2012/11/21 02:12:15
    Yes
    tommyg - POTL- PWCM-JLA
    Sure...as soon as we get rid of Fannie and Freddie.
  • seadog6608PWCM 2012/11/21 02:08:52
  • Bill 2012/11/21 02:01:10
    No
    Bill
    +4
    No, positively NO. The Bail Out binge should be over, because we taxpayers can't afford any more Bail Outs. We can't even pay for the ones that we have already done. Our Government is broke, and printing money faster that a drunken sailro on leave can spend.
    Pay day is about to hit the fan, and we have no money to pay for all the free-bees that our Government has been doling out to the takers. All the wanton Government spending has not worked, and more of the same will not work either. Doing the same thing over and over when it doesn't work, thinking it will eventually work, is just plain stupidity.
  • ajracestables1 2012/11/21 01:38:57
    No
    ajracestables1
    +1
    Why not? Everybody else did.
  • Glenda Simpson 2012/11/20 22:18:57
    No
    Glenda Simpson
    +4
    i'm tired of obama bailouts, that don't work, or the money isn't where it is suppose to be. My husband and I had some hard luck on a business and nobody bailed us out. We finally paid it off ourselves.
  • J.MaisOui 2012/11/20 17:58:39
    No
    J.MaisOui
    +2
    They should give refunds.
  • JamesGriffin 2012/11/20 17:00:19
    Yes
    JamesGriffin
    The "Bailout" should be given to the people who were sucked in and hooked by the "Liar loans" the the FHA backed. I know for a FACT that most of the people who applied for the mortgages never even knew that their income was being misreported by the lenders. Punish the CRIMINALS, not the victims...
  • SW 2012/11/20 14:31:21
    Yes
    SW
    Who knows? Farms and oil, energy and pharmacutical companies get tax payer bailouts every quarter so why not?
  • kevin.barnett.73932 2012/11/20 14:25:20
    No
    kevin.barnett.73932
    +2
    Hell noI am sick and tired of the misuse of our tax dollars in the hands of the government!!!!
  • maybaby 2012/11/20 13:22:52
    No
    maybaby
    +2
    Enough with the bailouts already.
  • ivegotloveinmypants 2012/11/20 12:52:00
    No
    ivegotloveinmypants
    +2
    I say this not out of heartlessness, or necessarily because of free market principles. However, can anyone who has said yes please tell me when they will say that this is one bailout too many? Have y'all forgotten about the DEFICIT?!!!! Have y'all forgotten that the middle classes are kind of...STRAPPED FOR CASH AT THE MOMENT? Have y'all forgotten that businesses are struggling? That so many people are out of work? And you think this bailout is a good idea! Yes, in the interests of the housing market, there can be some reason for providing a little cash, but I think it should be less than what they are asking for. And before this money is provided, there should be some difficult questions asked about why they are projecting such large losses in September. This culture of bailouts needs to be curbed in this time of financial woe.
  • Mark 2012/11/20 10:34:17
    No
    Mark
    +2
    Of course not for doing so would be illegal because there is no authorization in the US constitution for the federal government to be in the house financing business.
  • Cindy 2012/11/20 09:30:29
    No
    Cindy
    +3
    If this government can't manage its money, the middle-class should not get stuck giving them bailouts. Enough is enough! How can the FHA stabilize housing and leave us with $16.3 billion in debt. It's contradictory. People we must stand up to this terrible financial situation and make the government work for us. I don't know about you, but I'm sick and tired of highly paid government officials giving money out like its candy and not keeping an eye as to whose hand is in the cookie jar. Ask the government why the jobs aren't getting back to the USA; why it takes so long to decide how to get us out of the mess. They need to stop fussing--get over the election--and decide in our favor. I'd like to see one thing this government had done to help the middle class. So far, I see more illegal aliens and less middle-income jobs. Industry and large corporations are getting away with murder. What hypocrits these people are. Sometimes I think the government wants America to fail. What makes us strong is the middle class and we can't afford to give to stupidity anymore!
  • ivegotl... Cindy 2012/11/20 12:53:22
    ivegotloveinmypants
    Absolutely!
  • Avi Rosen 2012/11/20 07:29:57
    No
    Avi Rosen
    +4
    The group mishandled funds & should be bailed out and on our expense?
  • ivegotl... Avi Rosen 2012/11/20 12:54:26
    ivegotloveinmypants
    They say they helped you Americans through the recession. Fine. So where do these large losses come in?
  • M ivegotl... 2012/11/21 11:29:10
    M
    +1
    they forced companies to give out insolvent loans, then our government bailed out Fannie & Freddie. The FHA is a major reason for the housing burst and our current economic condition... and now they want to push their negligence on the taxpayer and make it impossible for people to qualify for new mortgages when they were the whole reason the mortgage system failed in the first place... sickening really.
  • ivegotl... M 2012/11/23 12:32:02
    ivegotloveinmypants
    What are insolvent loans?
  • M ivegotl... 2012/11/24 05:25:24
    M
    Solvency takes a while to explain (I will if you really want to get scientific), but it basically refers to the chance that the loan is repaid. The FHA backed Subprime Mortgages (junk loans or insolvent loans) by subsidizing the low interest rates offered to buyers in the late 90s through 2005. Originally this practice began in the Clinton era and it turned into an absolute free-for-all for the banks cashing in on loans likely to default. Simple formula really:

    Issue loan to people with crappy credit who don't have a prayer of paying it back > Get FHA subsidy for issuing said loan > Watch borrower default on the ARM (which the government already subsidized you for) > Seize property > Rinse & Repeat using the same property > $$$$

    to get a better idea of what I mean, see also...

    http://flickcos.com/subsidies...
    http://useconomy.about.com/od...
    http://www.nytimes.com/2011/0...
  • ivegotl... M 2012/11/24 15:41:01
    ivegotloveinmypants
    Oh yes, I think someone else pointed out that the President supported the allowance of insolvent loans for minorities with bad credit. A terrible idea- and if I lived in America, I would be counted as a minority. How could this have been allowed?!!! I am clueless.
    Thanks for the information.
  • wcake 2012/11/20 06:42:55
    No
    wcake
    +3
    No, Enough with bailouts. If anything goes wrong with FHA, then we are much responsible for it. Congress has been mismangable for over 30 years. They expect us to fix their problem by taxing us. Never ending with taxes, the ways they look for.
  • nana g 2012/11/20 05:13:57
    Yes
    nana g
    +2
    Why don't we just give everyone a bailout. We will never learn a lesson about overspending and poor loan practices that this Country allowed to happen. I am pretty fed up with the people running this Country. Is anyone else?
  • wcake nana g 2012/11/20 06:49:37
    wcake
    +1
    If gives everyone a bail out, then we would end up paying 100 % taxes, In end we would be broke to pay the next tax to come, double to come then triple to come each year... will lead toto more poverty. Never ending to this. No win- win on both sides and a big loss for Americans.
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