In this article from CNBC Real Estate Reporter Diana Olick, we find that the FHA is getting a cool 1 billion bailout from the American taxpayer. That would, of course, be all of us who still have a job in Obama’s controlled depression. It should be noted that this is the first time in the history of the FHA that such a bailout has been given.
You may also notice that the title in the CNBC story is a bit different. It says that the settlement saves the FHA from a bailout. I can only assume that some editor did that on purpose, because the body of the story clearly indicates that this is, in fact, a bailout. Oh sure they call it something different, but of course the real cost of this settlement still comes from us. We are the ones who pay higher premiums that the FHA is collecting. These come, in the end, from the customers. And the billions in penalties that the banks are handing over will also be paid by us in a variety of ways. As Milton Friedman said, there is no free lunch. The end user still foots the bill.
The real culprits in government who caused the bubble in the first place by manipulating the markets and the money supply will not be paying a price for their destruction of the housing sector. They will just blame it on the banks and hope you don’t notice the details. But the money being handed over to the government is very real and in the end must come from us. So the government causes the crisis in the first place and destroys the values in all of our homes, and then blames the banks and strong-arms them into giving the government billions that also have to come from us in the form of higher costs for every bank related product of service that we pay for. Perfect.
As part of the $25 billion attorneys general settlement with the nation’s five largest mortgage servicers over so-called, “robo-signing” foreclosure paperwork fraud, and a concurrent $1 billion settlement with Bank of America/Countrywide, the FHA nets a cool $1 billion infusion into its Mutual Mortgage Insurance fund (MMI). Add to that increased insurance premiums and the fact that the FHA’s 2010/2011 book of business are performing far better than previous books, and officials at FHA say the previous OMB estimate is, “obsolete.”
The budget calls for a 25 basis point increase in insurance premiums for higher priced loans (over $625,500). The current loan limit for FHA is far higher than it has been historically, $729,750, thanks to Congressional action to keep mortgage capital flowing. HUD Secretary Shaun Donovan said in a conference call today with reporters that FHA premiums, which were raised ten basis points recently to pay for the extension of the payroll tax cut, will be raised even beyond the budget proposal in order to strengthen the FHA fund, “as well as to insure that private capital continues to return to the housing market,” Donovan added.
