When the history of the Great Financial Panic of 2008 is written, the smart economists will focus on how ideology influenced the early choices that were made on how to deal with the housing "crisis".
In Thursday's testimony, we learned that the FHA has a good track-record with 'workouts', because lenders through the FHG's program face treble-damages if they do not go through loss mitigation steps...
Meanwhile, by almost all accounts, "Hope Now", the voluntary paper tiger, constructed by the Bush Administration, has fallen behind, despite the work they have done. My last read of their figures was that about 80% of their workouts were for ... prime loans (could that be their alt-a category?).
more ...
Federal Housing Commissioner:
In fact, loss mitigation efforts by HUD have helped about 300,000 families keep their homes over the last three years. Over a year ago, HUD noted an alarming number of American homeowners heading toward foreclosure and took action. Specifically, on August 31, 2007, acting through the FHA, HUD launched FHASecure. This initiative offers certain homeowners with adjustable rate mortgages, current or delinquent, the ability to refinance into a FHA-insured mortgage.
I am pleased to report that, since FHASecure was launched, FHA has helped nearly 400,000 families, many of whom were facing the loss of their homes, refinance into a safe, more affordable FHA-insured mortgage. We believe a total of about 500,000 families will refinance into more affordable FHA mortgages by the end of the calendar year.
Monday, October 27, 2008
Footnotes To History
HUD’s Federal Housing Administration (FHA) has been at the forefront of many of the Agency’s efforts during these daunting economic times. Just in the last two years, FHA has seen its market share grow from 2 percent to 17 percent and its loan volume is running at three to four times last year’s level. FHA guaranteed more than $181 billion in mortgage loans in FY 2008. In the midst of all this, FHA has been a leader in contacting FHA-insured homeowners in trouble to work out solutions. In 2008, FHA servicers completed more than 100,000 loss mitigation actions. Of these actions, 96,500 are currently retaining homeownership. This represents an 11.5 percent increase in home ownership retention over 2007. Overall, the expected retention rate for these borrowers is 87 percent.
