Mortgage

Mortgage Law, Mortgage Modification, and Foreclosure: FHA follows Freddie Mac and Fannie Mae

First Freddie Mac and Fannie Mae, now the FHA. Most of you, who have been paying attention, know about Freddie Mac’s and Fannie Mae’s involvement in the mortgage meltdown. To simplify things these institutions were encouraged to make loans to people who couldn’t afford them. Eventually this caused the financial crisis we are dealing with today. The real problem with this was the government’s own insistence on making loans to low income borrowers. So we learned a lesson right? Nope.

Now the FHA, it appears, just picked up where Freddie and Fanny dropped off. The FHA insured 21.5% of all new loans last year, up from 6% in 2007. That’s a huge increase. It appears these were risky loans too. FHA is going to have losses of at least 54 billion dollars. Precedence would tell us that we can expect another bailout within the next 24 to 36 months.

Folks, some of my blog entries seem a little doomsday-ish. I am a super positive person; but the things our government has done trying to control out economy are going to keep us in a recession for a while. You better make sure you are planning for the worst and hoping for the best. If you have an FHA loan, programs for modification are coming out. Find out if you can qualify. Lock in current rates where you can.

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