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    FHA BAILOUT ON THE HORIZON

     

    FHA – JUST ANOTHER BACKDOOR BANK BAILOUT

     

    USA TODAY reported in 2011 that the FHA was in trouble and dangerously close to holding no cash reserves for loan losses. An annual independent actuarial report puts the FHA’s loan loss reserves at 0.24% of its $1.1 trillion dollars in insured mortgages.

     

    The FHA, which does not originate loans, but insures them, has gone from less than 5%

    market share at the height of the housing boom to now more than 30 percent.

     

                Just like Fannie and Freddie our government, in an attempt to continue to prop up the housing market, is DOUBLING DOWN on bad decisions to save the banks.  Why do I say that? The market needs to correct itself. The prices need to fall back to a level that ordinary folks can afford to buy a house, a house they can hope to actually own some day. 

     

    HOUSEHOLD REAL ESTATE ASSETS – % OF GDP

     

    This chart demonstrates that in order to bring back housing affordability the fall in housing values needs to revert back to the long term mean.  So far we’ve dropped from above 160% to around 120%. We need to return to 80% – only half way there!

    THIS HAS TO HAPPEN AND DON’T YOU BELIEVE THAT IT WON’T?

    The liquidity has all but dried up, deleveraging has begun.  Banks scheme has been revealed and the clients for mortgage backed securities are still suing them to buy back the crap they already sold them.  No more liar loans will be offered for as long as memory of the last fiasco is seared in our collective memory.  Do you think real estate will boom anytime soon? Do you want to have a chance at owning a home free and clear someday? Do you want your children to have that possibility? Then all of us will just have to accept that our government shouldn’t continue to keep everything propped up to save foolish banksters that created the mess. Instead make them realize the true value of the crap they hold, don’t buy anymore of it off their books, and for God’s sake stop helping them unwind their criminal fraud.

     http://www.usatoday.com/money/economy/housing/story/2011-11-20/mortgages-fha-reserves-low/51299978/1

     

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