Friday, November 18, 2011

Business As Usual - FHA Mortgage Limit Raised

What the hell? At a time when we should be getting the federal government out of the housing market, this little gem appears.
President Obama on Friday signed into law a bill that will reinstate higher limits for Federal Housing Administration-backed mortgages in high-cost areas. In expensive housing areas such as Los Angeles and Orange counties, the limit for these FHA-backed loans had dropped to $625,500 from $729,750 on Oct. 1. The change became effective Friday.
Hey occupiers, how do you like that? Loan guarantees for 1%er home loans. How did this excrement make it out of the House? Well, many Republicans must have voted for it, and Democrats provided the margin of victory. Nice to see bipartisan folly in support of the wealthy. In fact only 101 Republicans voted against it out of 242. This comes at a time when we already know that the FHA is going to need more tax dollars to prop up its loan portfolio. From Rep. Scott Garrett (R-NJ) Chair of the subcommittee on GSEs:
". . .an independent audit of the Federal Housing Administration (FHA) revealed that the housing agency’s cash reserves are down 45% from last year and the “chance that future net losses on the current, outstanding portfolio could exceed current capital resources is close to 50 percent,” which could necessitate a taxpayer bailout next year."
Garrett issued this statement in response to the bill.
“This is what happens when the federal government meddles in economic affairs best left to the private market. Because the federal government has played an outsized role in our country’s housing system, the American taxpayers are now at risk of another costly bailout that will put future generations even deeper into debt. Today’s report shows that FHA is overleveraged at a shockingly high rate of 400 to 1, making Lehman Brothers and Bear Stearns, the poster children of the 2008 financial collapse, look like financially solvent institutions. The FHA audit proves once again that, if left unchanged, the reckless policies currently guiding our nation’s housing finance system will threaten the financial solvency of the United States of America."
Amen, brother.

However, I have to admit that this legislation isn't all bad. It is part of a continuing resolution (or CR, as we call it at work) that was also called a minibus bill, as opposed to omnibus. What was good about the minibus? High speed rail is dead. From FireDogLake (please keep the schadenfreude in check.)
The House passed a spending bill today that kills high-speed rail funding for the current fiscal year. The Senate is expected to follow suit, which means California should not expect the billions of dollars in federal aid on which its futuristic plan for bullet trains depends.
We need to alert Dean.


  1. Reminds me of the Onion article a while back stating that the republicans had just passed a plan of Universal Lawncare

  2. I am waiting for progressives to push single payer haircare. Insurance coverage for young people's haircare is shockingly low. Think of all the emergency hair disasters that young people suffer in the prime of their nightlives! These costs are often born by the parents who largely must pay out of pocket.

    Don't get me started on nailcare and the minority community!!!