Wednesday, October 14, 2009

State of the FHA – Critical…

Whitney Tilson, of T2 Partners, does a great job explaining the trouble that the FHA is in, but joins the brainless in praising the bailouts of the banking system. When will people see that it is these very bailouts that have caused the mess to begin with? At the end, the interviewer nails him on this point, but he simply does not get the cause and effect. The “utter calamity” that he thinks the government avoided is going to be a certainty because of people who think like that.

At any rate, Tilson explains that the FHA has gone from being only 2% of the mortgage market to now being over a quarter! AND, the default rate of FHA loans is soaring, the ’07 vintage are already at a 32% delinquency rate! Thus, Whitney explains, the FHA is likely to become the next bailout using your dollars and future earnings. Yet another Trillion dollar disaster brought to you by your own government.

The Next Big Bailout? FHA Facing "Cataclysmic" Default Rates