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To Larry:

September 14, 2009

More Mortgage Lies

The government mafia, led by our President, Timmy Geithner and the banksters continues to lie and steal with no end it sight. Contrary to the Obama's speeches, where we were assured the economy is getting better and housing has stabilized, comes this little tidbit about FHA mortgages courtesy of Karl Denninger over at The Market Ticker.



You are reading that correctly. Over 22% of all FHA loans are either delinquent or in foreclosure. Up an additional 1.5% just from last month. This comes after FHA mortgages have doubled in the last two years, up 2.6 million to 5.2 million. How long before this massive increase in FHA loans over the last two years start defaulting?

Ladies and gentlemen, this is your money. "F" stand for Federal.

What makes these statistics even worse than they appear are the lending standards the FHA is using. Loans are being made with only 3.5% down payment, and if you use your $8,000 tax credit you may not have to come up with anything. Isn't this what got us into this situation?

How can putting people into homes they can not afford, with monthly payments that are well beyond any safe payment to income ratio, be good for Americans? Is this the same wisdom that gave us Cash For Clunkers? Destroying perfectly good assets in order to get Americans to take on more debt for cars they can't afford. Anyone have buyer's remorse yet?

My guess is that this is just one more backdoor bailout of the banks. The cash that a seller gets for selling his house will most likely end up going directly to the banks to pay off that homeowner's mortgage. We are effectively taking that bad mortgage off the bank's books and replacing it with an equally bad mortgage on the taxpayers' books. Without these programs the banks would not only be foreclosing on these houses and taking losses, the prices the houses would be selling for would be considerably less. Now we have kicked that can down the road so that the FHA can take the hit on the home value when the new deadbeat lender defaults.

Rest assured that housing prices still have a long way to fall before bottom. This manipulation of the markets will not work. Cash for Clunkers proves this. After the government subsidy to help car sales we now see that this month's auto sales are going to be roughly 8.8 million units on an annualized basis, the lowest in 28 years. Can anyone say pulled forward demand?

Read the entire article here.

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