The Housing Crisis is Over–Wall Street Journal

I love reading old papers–it’s easy to see how even the best minds are occasionally wrong. The WSJ headline was from May 26, 2008. In retrospect, we had a bit farther to fall, and the crisis was just getting started. The editorial predicted the bottom of the housing market was 2008. It seems that we may now be at the bottom of housing prices, a year and a quarter after the article was written. Market timing is very difficult to predict, but there are great buys out there. And, don’t forget about the 8K first time home buyer’s credit.

Figuring out where the bottom is isn't easy.

Figuring out where the bottom is isn't easy.

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FHA Lender Goes Bust

The third largest FHA lender, Taylor Bean & Whitaker (TBW) went out of business a few weeks ago. They were a big source of FHA loans for mortgage brokers and small banks. Ginnie Mae appears to be tightening standards on FHA loans in general, and clamped down on TBW. The result: it won’t get any easier to get FHA loans.

zi-man-pottery-sepia

Sunny days at TBW are over.

Will the FHA tighten home loan standards?

Perhaps. They’ve already boosted required down payment to 3.5% in the last year, but remain one of the easiest sources of home loan money. An article in yesterday’s WSJ said that current delinquencies on FHA loans were up from last year by about 1/2 to 7.8%.

FHA is required by Congress to maintain cash reserves of at least 2% of the loans it insures. Reserves were 6.4% in 2007, 3% last year, and is expected to be less than the required 2% when those numbers will be published this September 30.

So, what will happen? Maybe increased down payment. Maybe increased oversight and regulation at FHA and FHA loan originators. Maybe another bail out. But, probably not anything that will help people get loans.

Below is a house I recently sold that went FHA. Payments were a bit over 1K per month for this cool home. As I’ve said before, now is a great time to buy a house.

FHA-house