patrick.net

Maybe the underlying story is just so that Congress has a justification to extend or increase the $8k housing handout. "If we don't do this, then the FHA is going to need a bailout which is going to cost you the taxpayers money anyway."

Making bad FHA loans was offical government policy. Barney Frank confirmed it:

“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”

http://www.nytimes.com/2009/10/09/business/09fha.html?_r=3&hp=&adxnnl=1&pagewanted=2&adxnnlx=1255053885-fupgBE41bBuoRhW+fObhmA

Expensive houses. Bad loans. Official government policy. When will the madness end?

FHA mortgage cap:

1995 $153,000
2008 $362,000
2009 $729,500

Thanks FHA for helping make housing affordable to poor folk!

When will the madness end? When Congress bleeds every cent from us to pay for Obama Socialism. Your taxes will have to go up, up, up to pay for this mess, while your standard of living will continue to plummet. Change you can count on. And you thought Dubya was bad...

Gee, uh...do I get the clairvoyance award for this one? I was crying foul about FHA six months ago.

In all seriousness, I am glad I'm not the only one who's incredulous. Every week it seems like some other highly dubious bit of housing policy emerges. It really puts you off.

Is this the first time in history that an asset bubble has been successfully reflated?

Government when the Free market just wont do...

It seems to me this is the going trend. Just look at the H1N1 virus. Every one knows someone that got a bad cold for a about three days, but hardly no body knows any one that actually died from the H1N1 virus. Because the truth is, the H1N1 virus doesn't kill people the under lying ailments do.

The virus makers were a little early by latching on to the H1N1 virus and rushing to meet the quota for the projected needed vaccines. But the reality was the virus was nothing more than a mere sneeze in the scheme of things.

So what does big pharm do? They have the Liberal media bombarding people every minute with pandemic rumors. Trying to scare every one into rushing out and buying a vaccine that has a greater chance of killing you, than you do of actually getting H1N1 and dying.

The local news here reports more on local people that opting not get the vaccine, which has the medical community in an uproar, because that was supposed to be a big profit maker this year.

Now there are almost talks of a mandate, because the free market is saying loud and clear to the Big Pharm "BULL SHIT!!".

If this is the new America then any country will do, wouldn't it?

as soon as The Sodomite B. Frank runs his mouth, it becomes very clear what we should do ... the exact oposite.

Just curious TOT, how exactly is the FHA involved with the H1N1 vaccine?

BTW, the only mandate is for NY health care workers. There has been an off again, on again debate about mandating influenza vaccines for health care workers for many years, it's nothing new or sinister. Here is a CDC report from 5 years ago http://www.cdc.gov/mmwr/preview/mmwrhtml/rr5502a1.htm discussing the subject. Mandated vaccines for every health care worker in the country who wouldn't have gotten one otherwise really won't make for very much change in the bottom line of any pharma company so I don't really see your point.

Aren't you one of the big free market people? Last time I checked pharma companies and the liberal media haven't been nationalized. It's a free market for everyone except NY health care workers. Get the vaccine or don't, everyone makes their choice. Choose to believe the liberal media or do your own research. Your argument contradicts itself.

MarkInSF says

FHA mortgage cap:
1995 $153,000
2008 $362,000
2009 $729,500
Thanks FHA for helping make housing affordable to poor folk!

I have already commented on this statement in an earlier post. Please read this -
Qualifying For a FHA Mortgage
To be approved for a FHA mortgage, you must have a satisfactory credit history, which shows your commitment to paying off debts in a timely manner. Also, you must be able to prove that the total monthly mortgage payment will be less than 29 percent of your monthly income. The number arrived at after multiplying your total monthly income by 29 percent is referred to as PITI, or principle, interest, property taxes, and insurance. The PITI amount is the highest amount that your monthly mortgage payments may be. Furthermore, long-term debt, such as car loans and credit card balances, in addition to the monthly PITI amount cannot be more than 41 percent of your total monthly income.

What you guys are missing is that the FHA Commissioner categorically stated that the average Credit Score of the borrower has jumped from 630 to 690 in the past year. I believe they are facts. True, there have been frauds and realtors and bankers are still conniving to game the FHA, but for most part, unless the home pricess tank a further 20 percent, I don't see the FHA going belly up or needing to be rescued.

Qualifying For a FHA Mortgage

...is a piece of piss. This is the rule, not the exception.

Hell, you can obtain an FHA loan fresh from Bankruptcy court.

http://www.nytimes.com/2009/10/09/business/09fha.html?_r=3&partner=rss&emc=rss

Austinhousingbubble says

Qualifying For a FHA Mortgage

…is a piece of piss. This is the rule, not the exception.
Hell, you can obtain an FHA loan fresh from Bankruptcy court.
http://www.nytimes.com/2009/10/09/business/09fha.html?_r=3&partner=rss&emc=rss

I had read that article and wondered how Bernadine Shimon coulda got dat loan. I would love to hear some facts from you to substantiate that she is the rule rather than the exception..

Tenouncetrout says

Government when the Free market just wont do…
It seems to me this is the going trend. Just look at the H1N1 virus. Every one knows someone that got a bad cold for a about three days, but hardly no body knows any one that actually died from the H1N1 virus. Because the truth is, the H1N1 virus doesn’t kill people the under lying ailments do.
The virus makers were a little early by latching on to the H1N1 virus and rushing to meet the quota for the projected needed vaccines. But the reality was the virus was nothing more than a mere sneeze in the scheme of things.
So what does big pharm do? They have the Liberal media bombarding people every minute with pandemic rumors. Trying to scare every one into rushing out and buying a vaccine that has a greater chance of killing you, than you do of actually getting H1N1 and dying.
The local news here reports more on local people that opting not get the vaccine, which has the medical community in an uproar, because that was supposed to be a big profit maker this year.
Now there are almost talks of a mandate, because the free market is saying loud and clear to the Big Pharm “BULL SHIT!!”.
If this is the new America then any country will do, wouldn’t it?

In answer to bob 2356's question as to what the FHA has to do with H1N1 virus, it's simple (and I'm surprised you even asked such a silly question):
People buy houses via FHA loans - and people who live in houses get the H1N1 virus. Duh. It's all part of a larger conspiracy - I'd tell you more but I gotta go buy more tinfoil.

I interpreted the We will not need a bailout, statement as meaning that they probably will need a bailout,

If the head of the FHA says they "will not need a bailout"..............THEY WILL NEED A BAILOUT.

This biggest problem is these are LOW DOWN PAYMENT LOANS. The buyer has no skin in the game. This is the biggest predictor for default. 3.5% down? Just from fees of sale you are underwater when you move in.

I would love to hear some facts from you to substantiate that she is the rule rather than the exception..

Don't take my word for it. A cursory Google search should be enough to get your stomach turning.

Or believe what you want. I've got no product to sell.

MarkInSF says

This biggest problem is these are LOW DOWN PAYMENT LOANS. The buyer has no skin in the game. This is the biggest predictor for default. 3.5% down? Just from fees of sale you are underwater when you move in.

The biggest problem according to me is a further slide in home prices AND Bernadine Shimon(unaffordable, fraudulant) type of loans NOT the 3.5% down payment or even no down payment loans, I believe as long as the credit score of these borrowers is averaging 690, the chances of default are slim.

The biggest problem according to me is a further slide in home prices AND Bernadine Shimon(unaffordable, fraudulant) type of loans NOT the 3.5% down payment or even no down payment loans, I believe as long as the credit score of these borrowers is averaging 690, the chances of default are slim.

Unfortunately, it helps promote this laissez faire mindset of strategic default. I can't recite how many times I've seen, 'you can always walk away' with regard to zero down or FHA loans. I won't go into all the reasons why I think this is bad for everybody. Suffice to say, I would have zero issue with 3.5% down, but ONLY if the loans were recourse loans. You play, you pay.

thunderlips11 says

MarkInSF says

FHA mortgage cap:

1995 $153,000

2008 $362,000

2009 $729,500

Thanks FHA for helping make housing affordable to poor folk!

hahahaha

Realtors and developers love FHA. They’d rather make 4% on $300k than 4% on $150k. And Developers prefer to sell a $295k house that cost them $150k in construction and land costs, then sell a $220k house with the same costs.

And yet posted inflation was only some 40% from 1995 to 2008.

Some interesting stories on how buyers have been taking advantage of the tax credit/FHA loans. Note that many of them were going to have a hard time getting the 3.5% down. I'm sorry, folks, but in my modest opinion, if ten grand breaks you, you have no business taking on a liability like a mortgage.

According to the numbers here, I should be shopping for a million dollar + home, lined in mink fur and staffed with robot butlers.

http://money.cnn.com/galleries/2009/real_estate/0908/gallery.first_time_homebuyers/index.html

elliemae says

Tenouncetrout says

Government when the Free market just wont do…

It seems to me this is the going trend. Just look at the H1N1 virus. Every one knows someone that got a bad cold for a about three days, but hardly no body knows any one that actually died from the H1N1 virus. Because the truth is, the H1N1 virus doesn’t kill people the under lying ailments do.

The virus makers were a little early by latching on to the H1N1 virus and rushing to meet the quota for the projected needed vaccines. But the reality was the virus was nothing more than a mere sneeze in the scheme of things.

So what does big pharm do? They have the Liberal media bombarding people every minute with pandemic rumors. Trying to scare every one into rushing out and buying a vaccine that has a greater chance of killing you, than you do of actually getting H1N1 and dying.

The local news here reports more on local people that opting not get the vaccine, which has the medical community in an uproar, because that was supposed to be a big profit maker this year.

Now there are almost talks of a mandate, because the free market is saying loud and clear to the Big Pharm “BULL SHIT!!”.

If this is the new America then any country will do, wouldn’t it?

In answer to bob 2356’s question as to what the FHA has to do with H1N1 virus, it’s simple (and I’m surprised you even asked such a silly question):

People buy houses via FHA loans - and people who live in houses get the H1N1 virus. Duh. It’s all part of a larger conspiracy - I’d tell you more but I gotta go buy more tinfoil.

silly me. how could i have missed this?

Yeah, and that’s inflation without factoring energy, not to mention education,

You have the Chivas Regal effect to thank for outrageous inflation in education costs. There was an article in Money magazine about a year ago explaining how higher sticker prices make people feel like they're getting a better product when it comes to education; consequently, the strategy among many Universities to increase enrollment numbers is to simply jack up the tuition. A lot. Perhaps the most dubious of all pissing contests: my student loan debt is more than your student loan debt.

From a different but related article:

In 2000, for example, Ursinus College in Collegeville, Pa. boosted tuition and fees by 17.6%. The following year the school received nearly 200 more applications than the year before, and within eight years the freshman class had grown 56%.

Hendrix College in Conway, Ark. had a similar experience in 2005 when it hiked its tuition rate by 29% to $22,000. The college in effect gave back much of the increase as financial aid or merit scholarships to 99% of the students; still, it seemed that tuition was as high as at places like the University of Richmond. Since then the number of incoming freshmen has increased by nearly 40%.

Says Hendrix College president Timothy Cloyd: "We are competing with schools that charge more, so it was hard to convince people that we were as good as our rivals when we charged so much less."

I think it goes without saying that the odds of getting a middle class job without a bachelor’s degree or attending a trade school are pretty slim these days.

That may be true in a general sense, but at least in my personal experience, it hasn't been. Given a choice between the two, I'm more a fan of vocational colleges. Unless we're talking hard sciences, I think there is a major overemphasis on college degrees. Granted, it depends on your field of employment and/or the talent scout in question -- but if you genuinely excel at what you do, you almost can't help but stand out. Frankly, most people I know are not really in the right line of work. They got into their fields for the money while their real talent lies fallow. Consequently, they usually do not shine or stand out, and their degrees act as a sort of aggrandizement. Neither my wife or I have college degrees, and we both do very well in our fields - certainly better than any of my friends who do have degrees, and I say that without an ounce of conceit. It may also help that we have zero college loan debt. Personally, I think there is a disproportionate amount of time spent in classrooms, and the two college professors I know readily concur with this. Academia is not what it once was. For a large part, it seems to breed parrots or rote careerists. In many cases, you could take out half the money you would spend on college loans and buy the books and educate yourself, (again depending on the field of study), but the problem is discipline. A lot of people only apply themselves to a subject if they have a monkey on their back (college loan debt). Otherwise...

By the way, Arizona State was one of the Universities in the study in Money Magazine who went on the record about having gigged their tuition costs.

thunderlips11 says

I couldn’t agree more with you about the oversupply of college grads and the attitude of Guidance Councilors pushing nothing but college.
An electrician or carpenter makes a lot more money, starting at a much earlier stage in life than your average English Major. Also a tradesman can always work for themselves. It is much harder for, say, an Sociology major to start their own business that has anything to do with Sociology. At least until they are a multi-book author with a PhD and can get name-recognition consulting jobs.
It’s like you can’t really enlarge the Special Forces, because there are only so many people who have the attitude to do that job, no matter how much money you throw at training more of them.

I agree with you 100%. In my technical IT field, I cant even count how many folks I have seen with a BS in Computer Science that just cant function at the job very well . They cant troubleshoot their way out of a shoe-box. If something breaks or doesnt happen as expected, they go brain-dead. That is not to say a college degree is a bad thing, but success really boils down to what you are good at to begin with and what your ambition and attitude adds to it. Not everyone can be a successful basket-weaver just because they have a degree in that field. All that said, I believe vocational training should start after the 6th grade so at least a kid will actually know how to do something after graduation.

OLD VERSION: The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.
Come winter, the ant is warm and well fed.
The grasshopper has no food or shelter, so he dies out in the cold.

MORAL OF THE STORY: Be responsible for yourself!

MODERN VERSION:

The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.
Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while others are cold and starving.

CBS, NBC , PBS, CNN, and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food. America is stunned by the sharp contrast.

How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?
Kermit the Frog appears on Oprah with the grasshopper and everybody cries when they sing, 'It's Not Easy Being Green.'

Acorn stages a demonstration in front of the ant 's house where the news stations film the group singing, 'We shall overcome.' Rev. Jeremiah Wright then has the group kneel down to pray to God for the grasshopper's sake.

Nancy Pelosi & Harry Reid exclaim in an interview with Larry King that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share.

Finally, the EEOC drafts the Economic Equity & Anti-Grasshopper Act retroactive to the beginning of the summer.

The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the Government Green Czar.

The story ends as we see the grasshopper finishing up the last bits of the ants food while the government house he is in, which just happens to be the ant's old house, crumbles around him because he doesn't maintain it.

The ant has disappeared in the snow.

The grasshopper is found dead in a drug related incident and the house, now abandoned, is taken over by a gang of spiders who terrorize the once peaceful neighborhood.

MORAL OF THE STORY: Be careful how you vote in 2010.