Friday, September 11, 2009

How can the FHA be in trouble?

I just read an article from the National Association of Realtors that states FHA may be in trouble and may need a tax payer bailout.

How can a company that charges 1.75% upfront and a monthly .55% on every loan be in trouble?

FHA has been the loan most in demand these past two years so their business volume is good. Their fees are high.. All this proves to me is that excessive paper work (if you have ever done an FHA loan, you do know what I mean) does not make good loans.

At 96.5% loan to value perhaps FHA could raise the credit quality and require some reserves. Perhaps they should raise the quality of the loans and at the same time reduce the paper work required for an FHA loan. CalHFA in California has a 6 month insurance policy that protects borrowers who lose their jobs- perhaps FHA could consider a program such as this.

As much as I get frustrated with FHA, they are needed and I hope they make some quick adjustments and do not need a tax payer bailout.

Doug Jones
(408) 209-6773 cell