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GOP Senators Blocking FHA Reform Push

Goodpasture

Well-known member
Good to see the GOP is concerned about people losing their homes, isn't it?

http://www.nationalmortgagenews.com/fraud/
GOP Senators Blocking FHA Reform Push

A few Republican senators are blocking efforts by Democratic leaders to pass a Federal Housing Administration reform bill just before the Senate leaves for a two-week Thanksgiving break. Senate Majority Leader Harry Reid, D-Nev., urged Republicans to expedite passage by allowing an up-or-down vote on the bill (S. 2338), which would increase the FHA's capacity to refinance struggling subprime borrowers. "These borrowers need better mortgage options, and FHA loans will be a better option with this legislation," Sen. Reid said.
 

backhoeboogie

Well-known member
What if those folks paid the mortgage?

What if they got a lawnmower and earned $2K a month mowing yards part time? What if that paid their mortgage and insurance?

Can you believe there are some folks who actually do that? When times were tough I had not only a second job, but also a third.

Do you expect me to believe it is the GOP's fault someone is not paying their bills?
 

Tex

Well-known member
On listening to the oversight hearings on this matter, it is apparent that some lenders (BLX) were committing fraud in the lending business. Indictments are in play right now and the company has fired the employees that were involved (which is a good thing).

The Detroit office of BLX was closed and BLX paid more than 8 million dollars and put another 10 million in escrow because of these frauds. The total amount out of this office was 76 million, I gather. Farm Credit was involved.

BLX had a preferred status with government backed mortgage securities. The Small Business Administration is getting the heat, for one, of not overseeing BLX when the frauds were revealed and redacting (sanitizing) the Inspector General's recommendations concerning their status as a preferred underwriter for the government's interest. The SBA basically rubberstamps the status of companies like BLX even when fraud is found out, thus allowing the frauds to continue into the mess they are in today.

This story and others like this is are ongoing and has significantly contributed to the problems the sub prime lending in the U.S. Sub prime fallout is cited by the fed. reserve as a major factor to the slower GDP rate forecasts.
 

Steve

Well-known member
which would increase the FHA's capacity to refinance struggling subprime borrowers.

wouldn't this amount to a bail out?

if a home is "near foreclosure",.. and the government bails out the home owner, isn't the bank then "getting" off the hook as well...

Ironically if this passes, it would more then likely be the biggest bail out in the history of bad investments...

and in six months when the "struggling subprime borrowers" fail to meet their obligations, the Taxpayers get stuck again..

No matter how it's worded this will only put the government on the hook for the bad loans and bail out the subprime lenders...
 

Tex

Well-known member
Steve said:
which would increase the FHA's capacity to refinance struggling subprime borrowers.

wouldn't this amount to a bail out?

if a home is "near foreclosure",.. and the government bails out the home owner, isn't the bank then "getting" off the hook as well...

Ironically if this passes, it would more then likely be the biggest bail out in the history of bad investments...

and in six months when the "struggling subprime borrowers" fail to meet their obligations, the Taxpayers get stuck again..

No matter how it's worded this will only put the government on the hook for the bad loans and bail out the subprime lenders...

It is a result of the bubble the fed and the house financing industry created (SBA is involved too).

This bubble will pop, the damages and to whom they are attached are the issue.
 

Steve

Well-known member
Tex
It is a result of the bubble the fed and the house financing industry created

So your for a bail out???

I disagree... and do not believe a bail out should happen.

..., it's the result of greed,.. selfishness,.. and the financing industry that created it...
 

Tex

Well-known member
Steve said:
Tex
It is a result of the bubble the fed and the house financing industry created

So your for a bail out???

I disagree... and do not believe a bail out should happen.

..., it's the result of greed,.. selfishness,.. and the financing industry that created it...

I don't think we should let anyone who was responsible walk away with tons of cash like the CEO of Countrywide did.

I never said I was for a bailout.

There is a problem with, as Alan Greenspan puts it, irrational exuberance. There were a lot of "little" people who fell into this bubble-- only wanting to buy and live in a house. These people should be shown some deference-- if it is possible.

The "investors" who bought houses with cheap money should not be bailed out. The were in it for the money and their bet didn't pay off.

The companies who profited from this bubble should not be able to take home their profits (over say 5 times the avg. income) just because they saw it coming as insiders and bailed early.

Regulators should be held to task for allowing these loans to be sold the way they were and without sufficient income/expense ratios.

By not counting the income/expense ratio, a lot of risk was packaged into the product for the mortgage investors. It really meant that they had to rely primarily on the value of the investment, rather than the borrower's ability to pay back. Since a larger and larger percent of the loans were no income loans or false income loans, it made the whole portfolio risky.

I think you can have a small amount of loans originated as NIQs (no income qualified loans) but not a large percentage.

For the crazy adjustable rate loans that were indexed to some interest rate, the interest rate risk was transferred from the lender to the borrower. By not having real strong borrowers, this put the whole system at risk (regulatory oversight problem here). Adjustable low interest loans that were originated based on the low payment only created more NIQ type loans. I am sure there was some originating fraud based on these lower adjustable rates (regulatory again).

No, I don't think there should be a free walk here, steve.
 

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