[mEDITate-OR:
be shocked by what we - you and U.S, - are seeing...
FHA issued more mortgages than BOTH FMae&FMac in Q1...!!!
Remember in the dead zone = 2002 to 7 securitized RE packaged loans, mostly ARMs and in the sand states, were over 50% of the market.
By July 08 there were NO non-agency, securitized RE loans available anywhere at any price.
By July 08 FMae&FMac were now over 85% of the mortgage market, and out of money to lend to U.S.
In no small part bcuz China had stopped buying US$ 35+ Billion per month of FMae&FMac bonds.
In Sept 08 the Fed Govt, aka WBush, had "nationalized" both FMae&FMac and the FED began buying US$ 1.2 Trillion of F&F securities, & their loan limits were increased - both size and numbers of loans.
That was then, this is now.
When the RE and mortgage industry no longer had "securitized" ARMs - no docs, no income - available for U.S. to use if we had no down payment, the RE industry switched over to writing FHA 3% down loans.
Oddly, or probably not, just as FMae&FMac had adopted the bad securitization ARM loan business, FHA suddenly allowed anyone who asked to write their loans.
What we saw first, over the last few years, was the sudden sharp rise in FMae&FMac bad loans, and now we are just starting to see the same sudden sharp rise of FHA bad loans.
What we do NOT know is whether these new higher volume FHA loans were under the weak controls, or under the newer tighter controls.
What MIGHT be true is that most of the buyers using the two Buyer Tax Credit programs are, in fact, FHA purchasers.
There have been some RE reports saying that that is the case.
IF that is true, it is much like post WW2, when young families bought a lot of new and existing homes.
And, if that is true, it will be good for all of U.S.
Disirregardless, the world, she is a'chang'n..., again, fast.
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The FHA, which backs loans with down payments as low as 3.5 percent, insured $52.5 billion of home-purchase mortgages in the first quarter, compared with $46 billion of purchases of the debt by Fannie Mae and Freddie Mac
A securitization of $237 million of jumbo mortgages by Redwood Trust Inc. and Citigroup Inc. last month was the first non-agency deal backed by new home loans in more than two years, after that market peaked at $1.2 trillion in both 2005 and 2006.
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Monday, May 24, 2010
“This is a market purely on life support, sustained by the federal government. Having FHA do this much volume is a sign of a very sick system.”
Federal Housing Commissioner David Stevens at Mortgage Bankers Association Government Housing Conference
(see Bloomberg, the FHA was involved in more transactions in Q1 than Fannie and Freddie combined)
No kidding...
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FHA Home-Financing Volume Sign of ‘Very Sick System’
http://www.businessweek.com/news/2010-05-24/fha-home-financing-volume-sign-of-very-sick-system-update2-.html
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