Makes Me Want to Fucking Puke

One more way for me to show that this country is going right down the shitter.

This is really, really sad. Take 5 minutes and read this, it is so important and YOU - not "the country" and not "the taxpayers" - YOU are going to pay for this and bail out the greedy lenders, the stupid borrowers and the idiot builders.

Oh, and by the way - guess who reported their first ever quarterly loss today?

Yep - the F.H.A.

Get used to it, more is on the way.

FHA Expands Mortgage Insurance to Troubled Borrowers (Update3)

By Dawn Kopecki

April 9 (Bloomberg) -- The Bush administration is expanding a federal mortgage insurance program to allow as many as 100,000 borrowers at risk of foreclosure to keep their homes.

Borrowers who are as much as three months behind on their mortgages, have damaged credit histories and owe more than their homes are worth will now be eligible to refinance with a federally insured loan, U.S. Housing and Urban Development Department Assistant Secretary Brian Montgomery said today.

The administration is trying to curb foreclosures, which jumped 60 percent in the past year and has contributed to a drop in consumer spending and economic growth. In relaxing the rules to help delinquent homeowners with zero to negative equity, the Federal Housing Administration is agreeing to make good on the mortgages that lenders write for the program should they default.

``We risk transferring this default risk right onto the backs of taxpayers,'' Representative Edward Royce, a Republican from California, said in an interview with Bloomberg Television. ``I think we're headed down the wrong road.''

Lenders, more than 100 of which have shut down or curtailed loans because of rising mortgage delinquencies, would fare better with this plan than under Democratic proposals requiring the industry to absorb more losses, according to Credit Suisse analyst Moshe Orenbuch in New York.

The plan gives lenders ``some hope of a more full recovery,'' Orenbuch said in an interview. ``If the borrower's situation improves down the road, you have a legal claim to it.''

The changes don't require approval from Congress.

The Right Balance

Under the program, FHA will insure loans with negative equity if lenders are willing to write down the loan balance so there is at least 3 percent equity for borrowers with two months of delinquencies and 10 percent for borrowers with three months of late payments within the previous year.

The administration is trying to find a balance between protecting homeowners who ``played by the rules'' without allowing banks to dump bad loans on taxpayers, Montgomery told the House Financial Services Committee in Washington.

``We must not federalize the housing market,'' Montgomery said. ``And we must not harm our economy through solutions that, however well intentioned, further erode the foundation of the nation's housing market, hurt homeowners who are meeting their mortgage obligations, or prolong the correction.''

Taxpayer Risks

About $460 billion of adjustable-rate mortgages are scheduled to reset this year, according to New York-based analysts at Citigroup Inc. Subprime ARMs accounted for the biggest share of mortgage delinquencies and foreclosures last year as rates began resetting higher amid the biggest annual slump for existing home sales in 25 years and the first decline in single-family homes values since the Great Depression.

``We need to do a whole lot more to dig out of the hole that the financial services industry has dug for us here,'' Representative Brad Miller, a North Carolina Democrat, said in a Bloomberg Television interview.

The proposal builds on the FHASecure program, which insured new loans to borrowers stuck in adjustable-rate mortgages that they were paying on time before their terms reset. The program only applied to mortgages with interest rate resets between June 2005 and December 2007. Montgomery said 150,000 homeowners have refinanced through FHASecure since it was announced in August and was projected to reach 400,000 borrowers by the end of the year.

There may be 750,000 to 1 million bank repossessions in 2008, Rick Sharga, executive vice president of Irvine, California-based RealtyTrac Inc., said in a March interview.

``This is not a silver bullet, but it will help some additional people stay in their homes,'' White House spokeswoman Dana Perino said at a briefing today.

Democratic Proposals

The announcement comes a day after Perino said the administration opposes Senate legislation that aims to curb foreclosures through counseling, tax credits for buyers of foreclosed homes and clearer mortgage disclosures for consumers.

House Financial Services Chairman Barney Frank, a Democrat from Massachusetts, and Senate Banking Chairman Christopher Dodd, a Democrat representing Connecticut, are pushing legislation that would allow lenders to sell nonperforming loans to a special, taxpayer-backed pool of as much as $400 billion under FHA.

Montgomery said the administration ``strongly'' opposes Democratic ideas to use FHA as a clearinghouse for lenders and other investors to unload bad loans. FHA insures 3.8 million loans valued at $365 billion.

Under the administration's plan, the federal government actually insures mortgages with substantially higher loan-to- value ratios than Frank or Dodd's proposals, ``creating additional government exposure as home prices decline,'' Federal Deposit Insurance Corp. Chairman Sheila Bair told lawmakers at a hearing in Washington today.

Protecting Taxpayers

Federal Reserve Governor Randall Kroszner, who supported much of Frank's bill, told lawmakers that requiring lenders to take a bigger initial writedown ``better protects taxpayers from future losses and gives the borrower a greater incentive to stay current on the refinanced mortgage.''

Montgomery also rejected Democratic proposals to provide $10 billion in loans to cities and states to buy and renovate vacant foreclosed properties.

``As with similar proposals, the principal beneficiaries of this type of plan would be private lenders,'' he said. ``It may have the unintended consequence of making foreclosure a more attractive option for lenders

At least one guy in Congress gets it - take a minute and call Congressman Royce like I just did and let them know that people think the way we do.

It is important for Rep. Royce to hear from his constituents. Feel free to contact him anytime using the following methods:

Orange County:
Phone - (714) 992-8081 or (562) 220-2411
Fax - (714) 992-1668

Washington, DC:
Phone - (202) 225-4111
Fax - (202) 226-0335

Fuck the borrowers, the lenders and the builders; they got themselves into it, let them get themselves out.