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As fall approached last year, we started hearing whispers of the potential need for a bailout of the Federal Housing Administration (FHA).
By December, the word “potential” started appearing less frequently next to “bailout.”
Now as 2013 begins, it seems certain FHA will need taxpayer assistance this year.
Since the housing crisis, FHA has dramatically increased its footprint in the housing market, and currently serves about one-third of all underwater borrowers. The bulk of FHA’s problems are attributed to loans made to borrowers who required down payment assistance, and the default rate for these loans is through the roof, accounting for much of FHA’s current liability.
It’s worth noting that in an environment of “recovery” taxpayers are going to take another hit, and questioning frankly whether FHA’s current situation is indicative of a recovery. A few members of Congress have actually expressed concern about the problems at FHA, and offered up solutions.
The Letter
Recently,…
John Grant
is the president of the Distressed Property Coalition, a private advocacy effort formed by the top leaders in the residential real estate industry, and dedicated to private market solutions, smaller government, and protecting taxpayers. DPC exists because investors deserve an easier path to buy and sell houses. Investors deserve to shape policies that govern them, not to be subjected to them. Investors deserve better information on current laws and policies. Investors deserve a safe environment to learn more about the industry. DPC is dedicated to providing these services to the residential real estate community. Their content and track record of success in Washington are unprecedented for this industry.
To received Mr. Grant’s policy briefings and newsletter, please visit www.distressedpropertycoalition.com