FHA is going down (Mandelman Matters)
(from Mandelman’s Monthly Museletter, Issue 6.0)
FHA IS GOING DOWN
The Washington Post reported the following:
The share of borrowers who are falling seriously behind on loans backed by the Federal Housing Administration jumped by more than a third in the past year, foreshadowing a crush of foreclosures that could further buffet an agency vital to the housing market’s recovery.
I don’t know who talks like that, but it’s bad news at FHA, and it should come as no surprise to anyone.
About 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago, the agency’s figures show.
Also bad news, right? Right. Now check this out:
Although the FHA’s default rate has been climbing for months and eating into the agency’s cash, the latest figures show that the FHA’s woes are getting worse even as the housing market shows signs of improvement. The problems are rooted in FHA mortgages made in 2007 and 2008. Those loans are now maturing into their worst years because failures most often occur two to three years after a mortgage is made.
That is one seriously dysfunctional paragraph, let me tell you. And its authors, deserve to be punished for flagrant intellectual dishonesty and banned from writing so much as a postcard for at least a year.
For now, just about every major measure of the agency’s financial health is worsening.