Posts Tagged ‘Maxine Waters’

All too predictable

A couple of years ago, when Reps. Barney Frank and Maxine Waters were pleading for a huge increase in the size of loans that could be insured through the Federal Housing Administration, my first thought was: Are they nuts? But that was the thinking at the time — with the price of real estate spiking, they thought (or at least Waters did, judging from her statements on the House floor) that bulking up the size of permissible morgtages was doing a favor to their constituents, who after all lived in very expensive cities, real estate-wise.

Well, FHA is now shaping up to be a pricey disaster, thanks to even more idiotic policy decisions that were supposed to help FHA compete with subprime. The Washington Post has an alarming story today about a surge in FHA loans that have recently gone into foreclosure without a single payment, a sure sign of fraud. HUD in the last couple of years has permitted FHA lenders to do direct marketing of loans (junk mail/telemarketing), insta-refinances for existing customers, and (ohmigod) cash out mortgages. Government-insured cash-out mortgages!! HUD might as well have been asking lenders to set up bogus deals. And this time around, the government is automatically on the hook for any losses the insurance fund can’t cover.

Sunday, March 8th, 2009 | Tags: , , , ,
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