Uh oh. FHA negative reserves…Say it ain’t so!

[Coronita]

http://finance.yahoo.com/news/fha-may-show-negative-reserves-195228653.html

The Federal Housing Administration (FHA), in a report due out Friday, could disclose that its reserves for future mortgage-insurance claims dipped into negative territory for the first time in almost a quarter of a century.
Every year, the FHA, the government insurer of home loans, is required to issue an independent analysis of the “economic net worth and soundness” of its insurance fund.
This is the fund that pays lenders on loans that go bad, which is why FHA loans are available for borrowers with relatively lower credit scores. The FHA insures roughly $1.1 trillion in mortgages.
The report also looks at the FHA’s capital reserves, which are there to cover future loan losses.

[UCGal]

Time to up the PMI requirements….

[The-Shoveler]

Maybe that was why the posturing Ben was doing today, talking about the need to for easier lending standards,
Maybe a move to get additional funding.
Housing is all about credit markets (well and inflation).

[The-Shoveler]

If U.S. housing falters here, there is really not much back stop for the world economy at this point,

IMO,

What’s too painful will be avoided at all costs.

The cost of a world wide recession right now would be way more costly than I want to think about, but that’s just me.

That Said, Iran is still a real wild card right now, anyone read about rockets being volleyed, just saying,

[Coronita]

[quote=The-Shoveler]Maybe that was why the posturing Ben was doing today, talking about the need to for easier lending standards,
Maybe a move to get additional funding.
Housing is all about credit markets (well and inflation).[/quote]

I caught that… I was thinking “are you nuts?”
But actually, at this point i would prefer if Ben had a way to cause mortgage rates to drop to 1% or better 0%.

[livinincali]

[quote=The-Shoveler]Maybe that was why the posturing Ben was doing today, talking about the need to for easier lending standards,
Maybe a move to get additional funding.
Housing is all about credit markets (well and inflation).[/quote]

The problem is that all the growth in the economy for the past 20-30 years has come from increases in debt. If you back out the debt the economy has been shrinking. The entire goal of the fed is to trick people into taking on debt or at least spending every penny they have to grow the economy. 40-50 years ago growth came from saved capital, now it comes from debt. Now that the masses cannot or will not participate the leaders are getting desperate because they fully understand that all assets are priced in credit/debt. If that debt has to be liquidated then all the assets are going to fall in price,the big banks are going to go bankrupt and the masses are going to revolt because their retirement depends on that debt backed wealth. I.e. their retirement depends on their children and grand children to be obligated to produce them goods and services in the future. What better way that larding on student loan and government debt.

In essence people are holding wealth backed by debt and the debtors can’t pay in full so much of the wealth needs to be discounted. The big banks are playing a game of musical chairs in which they hope to be the one that isn’t holding the empty bag when the music stops. They are putting the taxpayer on the hook slowly over time. In my opinion the fed’s QE game is essentially a counterfeiting operation that has to walk the fine line between stimulating demand and not being detectable in prices. I.e. similar to somebody counterfeiting a million dollars in $5 bills and spending little bits here and there so that they don’t draw attention.

[The-Shoveler]

You may not think this is related but I think it is.

Every 50-70 years the world goes through technology pyridine shifts, (guns, steamships, railroads, electricity, cars, airplanes, computers etc…)
These shifts always result in dislocations and disruptions.

Right Now we are going through a new one “AUTOMATION”
This is the real story.

[spdrun]

Amazing. Ben opened his stinking piehole and the stock market still fell today!

[UCGal]

[quote=The-Shoveler]You may not think this is related but I think it is.

Every 50-70 years the world goes through technology pyridine shifts, (guns, steamships, railroads, electricity, cars, airplanes, computers etc…)
These shifts always result in dislocations and disruptions.

Right Now we are going through a new one “AUTOMATION”
This is the real story.[/quote]
pyridine – so a chemical uses as a solvent or reagent is going to save the world?
http://en.wikipedia.org/wiki/Pyridine

(I know you meant paradigm… but I was curious if pyridine was a word… and it turns out it is.)

[The-Shoveler]

[quote=UCGal][quote=The-Shoveler]You may not think this is related but I think it is.

Every 50-70 years the world goes through technology pyridine shifts, (guns, steamships, railroads, electricity, cars, airplanes, computers etc…)
These shifts always result in dislocations and disruptions.

Right Now we are going through a new one “AUTOMATION”
This is the real story.[/quote]
pyridine – so a chemical uses as a solvent or reagent is going to save the world?
http://en.wikipedia.org/wiki/Pyridine

(I know you meant paradigm… but I was curious if pyridine was a word… and it turns out it is.)[/quote]

Ha! OK you caught me, This is what happens when you rely too much on tech. to catch your errors.

i need a proofreader.

[Coronita]

New article.

Running a deficit of 13.5 billion

http://finance.yahoo.com/news/fha-capital-reserves-exhausted-audit-231725679.html

Hey, it’s the american way.

SAN FRANCISCO (MarketWatch) — The Federal Housing Administration has exhausted its capital reserves and is currently running at a deficit of $13.5 billion, The Wall Street Journal reported late Thursday, citing an independent audit. The FHA, which is expected to release the audit on Friday, is the arm of the Department of Housing and Urban Development that insures home mortgages. The audit is expected to show the FHA’s reserves were not enough to cover losses on $1.1 trillion in guaranteed loans, and that the agency will need taxpayer funding for the first time in 78 years, according to the Journal.

lol… bend over people…..

[NicMM]

Folks, I can share what is happening in bay area. Housing market is hot here! Houses in decent areas got multiple offers and often sold at a price 50k ~ 100k over asking price. Some of the houses ended up to or over their 2006’s price. It feels crazy to see this.

-NicMM

[The-Shoveler]

actually 13.5 billion is not too bad (almost a rounding error when we are talking trillions).

I was expecting much worse.

[The-Shoveler]

Glad I don’t need to move to the bay area.

Well good luck with that.

[bearishgurl]

[quote=flu]New article.

Running a deficit of 13.5 billion

http://finance.yahoo.com/news/fha-capital-reserves-exhausted-audit-231725679.html

Hey, it’s the american way.

SAN FRANCISCO (MarketWatch) — The Federal Housing Administration has exhausted its capital reserves and is currently running at a deficit of $13.5 billion, The Wall Street Journal reported late Thursday, citing an independent audit. The FHA, which is expected to release the audit on Friday, is the arm of the Department of Housing and Urban Development that insures home mortgages. The audit is expected to show the FHA’s reserves were not enough to cover losses on $1.1 trillion in guaranteed loans, and that the agency will need taxpayer funding for the first time in 78 years, according to the Journal.

lol… bend over people…..[/quote]

Duh . . . we should expect nothing more and nothing less than hearing that the FHA now needs a “bailout” for the first time in history! The writing was on the wall long ago. “Buyers” using its “flagship” 203b program to purchase a residence have on average a FICO score in the low 600’s :-0

see: http://piggington.com/fha_loaning_to_rebound_buyers_just_3_years_out_of_foreclosurebk

http://piggington.com/fha_loans_blowing_up

http://piggington.com/fha_mortgage_insurance_premiums_may_triple

http://piggington.com/fha_insurance_cost

http://piggington.com/i_am_shocked_shocked_conforming_limits_going_back_up

http://piggington.com/need_neighborhood

ETC…

[Author]

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