Short Sale, Foreclosure and Strategic Default

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Friday, September 11, 2009

What happens to the recovery if the FHA runs out of money?

FHA loans have driven this market recovery. 

REALTOR® Magazine-Daily News-Will Taxpayers Have to Bail Out FHA?
Will Taxpayers Have to Bail Out FHA?
The Federal Housing Administration stepped up to guarantee low-downpayment mortgages for riskier buyers after the mortgage market crashed. Now with many of them in default, the FHA’s losses have mounted, and it’s possible that its reserves will fall below the 2 percent level required by law. If that happens, taxpayers may have to bail out FHA.

Some housing analysts say that this will lead to tighter restrictions on FHA mortgages.

"It absolutely changes the political dynamic once you have to ask taxpayers" for money, says Lisa Marquis Jackson, vice president for John Burns Real Estate Consulting.

The 10 states with the most FHA-insured mortgages are:

1. Texas
2. California
3. Florida
4. Georgia
5. Ohio
6. Illinois
7. Pennsylvania
8. Michigan
9. Virginia
10. North Carolina


Source: The Wall Street Journal, Nick Timiraos (09/05/2009)


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