From FHA Mortgage Guide:
For all the support in the lending community, not everyone on Capitol Hill is equally thrilled.
Not to be outdone, Sen. Jim Bunning (R-KY) also has objections to FHA (Federal Housing Administration) modernization. Bunning wonders why we need an expanded FHA when the private sector already produces a variety of loans. Unlike many politicians, Bunning could not be more clear.
The Administration’s F.H.A. reform proposal went nowhere in the Senate last year, and it should not go anywhere this year. “What problem would expanding an already faltering F.H.A. fix? I and others, including the Chairman, have been critical of some of those products and practices, and of the regulators for letting things get out of control. But that is a problem of people buying houses when they were not able, and not a problem of someone who is able and ready but can not find money. In other words, a larger F.H.A. would not have prevented that problem. Again, I do not see the hole that F.H.A. is needed to fill.
The Administration’s F.H.A. reform proposal went nowhere in the Senate last year, and it should not go anywhere this year.
“What problem would expanding an already faltering F.H.A. fix? I and others, including the Chairman, have been critical of some of those products and practices, and of the regulators for letting things get out of control. But that is a problem of people buying houses when they were not able, and not a problem of someone who is able and ready but can not find money. In other words, a larger F.H.A. would not have prevented that problem. Again, I do not see the hole that F.H.A. is needed to fill.
and
“This Committee has always operated on the principle that government should not compete with the private sector. But strangely, that is exactly what F.H.A. is proposing with their so-called reforms. By asking Congress to raise the loan limit and open the door to no down payment and 40 year mortgages, F.H.A. is positioning itself to compete with the private sector. That is not only un-American, but it is a step towards a state-run economy. “This would bring great risk to the taxpayers who will have to the foot the bill if there are too many non performing loans. And that is a real possibility. No money down mortgages are some of the worst performing loans in the market. We should discourage them, not encourage them. F.H.A. loans are not immune from problems. I do not have a lot of confidence that the taxpayers will not be left holding the bag.
“This Committee has always operated on the principle that government should not compete with the private sector. But strangely, that is exactly what F.H.A. is proposing with their so-called reforms. By asking Congress to raise the loan limit and open the door to no down payment and 40 year mortgages, F.H.A. is positioning itself to compete with the private sector. That is not only un-American, but it is a step towards a state-run economy.
“This would bring great risk to the taxpayers who will have to the foot the bill if there are too many non performing loans. And that is a real possibility. No money down mortgages are some of the worst performing loans in the market. We should discourage them, not encourage them. F.H.A. loans are not immune from problems. I do not have a lot of confidence that the taxpayers will not be left holding the bag.