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The projected loss is the highest in the home loan program since 2004, and officials said the F.H.A. had to withdraw $4.6 billion from its $21 billion capital reserve fund in May to cover the costs. They said the agency, which is self-sustaining, would not need appropriations from Congress to remain solvent.But Mr. Montgomery warned that the F.H.A. would have to renew its efforts to end the seller-financed down payment program, which accounted for 35 percent of its loans in 2007.He said the mortgages had foreclosure rates three times those of traditional loans and would push the F.H.A. to the brink of insolvency.“Let me repeat: F.H.A. is solvent,” Mr. Montgomery said on Monday in a speech at the National Press Club. “However, no insurance company can sustain that amount of additional costs year after year and still survive. Unless we take action to mitigate these losses, F.H.A. will soon either have to shut down or rely on appropriations to operate.”
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and not getting better....
Fannie, Freddie offer mortgages sans cash downBy David S. Hilzenrath The Washington PostWASHINGTON – Despite the bursting of the housing bubble, it's still possible to buy homes with no money down. In fact, it's possible to borrow up to 105 percent of the purchase price, leaving the buyer with more debt than the house is worth.It might sound like a pitch from a late-night infomercial. But the offer comes from Freddie Mac and Fannie Mae, two government-chartered companies with potentially conflicting mandates to uphold prudent lending standards and make homeownership more attainable.Freddie Mac says its "HomePossible" mortgages can help buyers with limited credit or savings, including teachers, firefighters and members of the military.But, as a wave of foreclosures shows, stretching too far to buy a home can end badly.
FHA is going to start adding rate hits on credit scores..... Maybe they hope this will help increase reserves?? My personal opinion is that FHA will soon have radical reform and will not look anything like it does now.
FHA has taken losses because of the drop in home prices. Just like everyone else. FHA will be fine in the long run.
FHA will be fine in the long run.
Sorry I didnt post the link
Brian D. Montgomery, the F.H.A. commissioner seems to think otherwise.
Perhaps, FHA should consider increasing the MI charged to those who benefit from DPA programs; MI would be the most sensible way to hedge their bets.
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