Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

7 responses to “FHA: Foreclosure One Year Ago? No Problem!”

  1. ChrisM

    Correct me if I’m wrong, but I thought mortgage insurance never went away under FHA mortgage until the loan was completely paid off…. Seems like that makes FHA mortgages significantly less attractive.

    Hmm, maybe an 80k credit for first-time home buyers using FHA? :-)

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  2. mike

    After FHA insurance fees increased and extended to the life of the loan, the program is attractive to a much smaller group of buyers. Cutting the waiting period opens it back up to other people that have few options for getting a conventional loan.

    It’s probably worth pointing out that the FHA funding issues are mostly due to the loans issued during 2007-2009 when the program was explicitly used to slow the rate of price declines. Personally, I don’t think that was an appropriate use as it set up marginal buyers to take a huge hit for little benefit. Recall that it wasn’t until AFTER that carnage that much was done to fortify FHA’s loss reserves. At least in this case, the fees are in place to (hopefully?) cover the true risks inherent in lending to marginal borrowers.

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  3. Erik

    How do I get house counseling so I can get another property? Sign me up! When I relapse, I can blame it on my housing counselors. I think I need housing rehab. I am addicted to free rent and the cash incentive given for leaving the residence.

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  4. Young Gun

    Bernie Madoff is not the only person who can run a ponzi scheme. I think it is the administration shoting itself in the foot and not enforcing real consequences. Some folks, even friends of mine milked the system for years. I had one buddy who bought his house brand new, paid for 6 months, and then lived rent free for almost 3 years. Part of that time he rented the house out. Let the market correct on its own. That will lead to a more sustainable recovery.

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  5. David B.

    Paging Mr. Ponzi on line one…

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  6. Blurtman

    RE developers can walk away from massive loans, and yet raise more money without having to take a three year time out. Why not individual homeowners?

    “In the beginning, investors and lenders could not get enough of the record-breaking $5.4 billion deal to buy the largest apartment complexes in Manhattan: Stuyvesant Town and Peter Cooper Village….The partnership that bought the 80-acre property on the East River announced on Monday that it was turning the keys over to its lenders after it defaulted on its loans and the value of the property fell below $2 billion.”

    http://www.nytimes.com/2010/01/26/nyregion/26stuy.html?pagewanted=all&_r=0

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  7. No Name Guy

    Why, what ever could go wrong with this policy change?

    (Hmmmm, while stroking beard with a thoughtful gaze).

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