With the FHA Help, Easy Loans in Expensive Areas

The New York Times (“With the FHA Help, Easy Loans in Expensive Areas”) continued to hammer home the problems mounting at the FHA in today’s paper. Some of the most compelling quotes/data points include the following:
· On Thursday, the Mortgage Bankers Association said more than one in six F.H.A. borrowers was behind on payments [14.4% of loans are delinquent; 3.3% are already in foreclosure]
· In 2007, fewer than 4,400 F.H.A. loans were made in California. The Economic Stimulus Act of 2008 helped change that by temporarily doubling the maximum loan the F.H.A. insured, to $729,750. The F.H.A. has insured more than 107,000 loans so far this year in the state, according to DataQuick.
· “If one of these higher-limit loans fail, that’s equivalent to two or three cheaper loans,” Mr. Donohue said. “You have to ask yourself, was the F.H.A. ever intended to address these markets?”
· “It was kind of crazy we could get this big a loan,” said Mr. Rowland, 27. “If a government official came out here, I would slap him a high-five.” “We were resigned to waiting another year,” said a second partner, Michael Bedar, 31. “Then we read about the F.H.A. I had never heard of it before, and couldn’t quite believe it. But it was the answer to our problems.” They put down about $33,000, split among the three of them [the purchase price on the building was $963,000]. “Everyone should have the chance to do this,” Mr. Kurland said.
· Everyone may get a chance. Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that he planned to introduce legislation next year raising the maximum F.H.A. loan by $100,000, to $839,750. His bill would make the new limits permanent.