Mark Winston Griffith

FHA program leaves homeowners unsecure

Certainly it's not as tragic as the Sean Bell verdict, but a Day of Outrage is needed to bring attention to the mounting foreclosure crisis and the refusal of the federal government to come up with viable ways to assist homeowners in distress.

The latest debacle comes in the form of the news, as reported in today's New York Times, that fewer than 2000 homeowners facing foreclosure have been assisted by the so-called F.H.A. Secure program, which was heralded by President Bush last August as a plan to help vulnerable homeowners. The Federal Housing Administration program was supposedly designed to provide homeowners with an option to refinance their unaffordable subprime loans.

(In other news, the Times reported that the federal plan to make it easier to get jumbo mortgages, loans over $417,000, and to "raise the ceiling for loans backed by government-sponsored housing finance agencies to nearly $730,000 in the nation's costliest locations," is failing miserably.)

"Democratic lawmakers estimate that at least 1.5 million people have fallen behind on their mortgage payments. Yet from October 2007 through the end of March, only 1729 delinquent mortgages were refinanced by F.H.A. housing statistics show. "

It's not difficult to understand why. The program requires that out of the past 12 months applicants must make 10 on-time payments. Which means that, by design, the program is suited for people who don't need the help in the first place.

Federal officials have to wake up to the fact that it's not just the re-setting of mortgages that is making these loans unaffordable. The subprime mortgage industry is imploding because most of these loans were recklessly underwritten, unaffordable from the very beginning. (The Wall Street Journal reported today that a federal probe of Countrywide, the nation's largest mortgage lender, found that the company "deliberately overlooked inflated figures for many borrowers". And this was on loans considered to be "prime", low-risk mortgages.) Add to this increasing pressure from gas prices and an economy going sour, and you have a lot of people who are finding it difficult to make any mortgage payment on time, much less ten out of the last twelve.

And the band played on.

Mark Winston Griffith: Author Bio | Other Posts
Posted at 8:31 AM, Apr 30, 2008 in Economy
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