Amid talk of Congress approving a bill to give even more loans to borrowers struggling
to make payments through the Federal Housing Administration (FHA), statistics show
one out of six borrowers whom are currently in an FHA loan are delinquent. Please see
the link below.
http://whistleblower.ml-implode.com/
I've argued the government is the biggest lender of subprime mortgages in the country.
And not only is the government the biggest lender of subprime mortgages, but they do
not know how to properly evaluate a borrower's ability to repay and tend to give loans to
riskier borrowers. Facts are facts. These numbers cannot be twisted.
The talk on the street is that loans are not being repaid because income was not
documented, however the study in the link above proves that the FHA loans, the ones
where documentation such as most recent pay stubs and tax returns are having high
default rates. Keep in mind that FHA rarely cares about credit score or repayment on
other and previous debts, so long as the income ratios look good in the feds' eyes.
Look, when you've got someone with a credit score of 581 and tons of lates - even
though the monthly income to debt ratios look good - then that is probably a good time
to turndown the application. Instead, loans are being granted because that person was
able to provide a few documents. And now, the taxpayers of America are paying for it.
The problem is not with documentation type, I argue, but rather with previous payment
history and fraud. FHA is worse, in many cases, than the worst subprime lenders ever
were.
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