[quote=livinincali][quote=bearishgurl]
The agency’s biggest blunder was when they increased the ceiling on their high-cost area lending limit in December of 2008 for ONE SFR to $729,750 thus raising it from 75% to 87% of the FF conforming limit. Although it was later lowered in 2012 to $697,500,
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I’m not sure that their biggest mistake was raising loan limits. There biggest mistake was sticking around as the low down lender when everybody else decided no skin in the game and <5% interest rates wasn't worth the risk. You could have probably gotten a low down payment loan if FHA wasn't around but it wouldn't be at prevailing 30 year fixed mortgage rates. It would probably be close to 10%.
Homes are a highly leveraged asset for home owners at the margin and those at the margin set the prices. If you eliminate the leverage you eliminate the marginal buyer. If you like higher home prices FHA and the Fed did everything in their power to help you.[/quote]
No, livinincali, homes are only a “highly leveraged asset” for those fools (mostly “worker bees” at the mercy of employers) who tend to borrow themselves into oblivion to get into one. Many, many regions of the country have a VERY LARGE percentage of homeowners (over half) who owe 0 to $20K on their primary residence.
Yes, the FHA made a BIG mistake in 2008 when it decided it would be the “lender of last resort.”
