Businessweek had an article on the revival of former subprime lenders thanks to the FHA Hope for Homeowner’s program, part of our hard-at-work tax dollars spent against our will under the first $300 Billion bailout passed in July. Many “new” lenders are apparently committing as much fraud as they can get away with in today’s lending environment and using Tax Payer funds via the FHA to fund these loans.
If that gets your skin crawling you may find a little solace knowing that for loan re-works only 150 applications have been submitted to the FHA by banks willing to write down principal. Not only that, the default rate of those loans is around 50%, all according to a CNBC article. I imagine the new FHA-backed loans will prove to be quite problematic as well.
But of course, the Government now realizes their “help” the first time around was anything but, and is changing the requirements again; here come 40 year loans, do I hear 50?
I think it’s time to tell Congress they’ve done enough.