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Business Week - FHA the new Subprime

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Mike Kennedy

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Elite Member
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Sep 28, 2003
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Certified Residential Appraiser
State
New York
http://www.businessweek.com/magazine/content/08_48/b4110036448352.htm?campaign_id=rss_daily

FHA-Backed Loans: The New Subprime

The same people whose reckless practices triggered the global financial crisis are onto a similar scheme that could cost taxpayers tons more


" Some current and former federal housing officials say the agency isn't anywhere close to being equipped to deal with the onslaught of lenders seeking to cash in. Thirty-six thousand lenders now have FHA licenses, up from 16,000 in mid-2007. FHA "faces a tsunami" in the form of ex-subprime lenders who favor aggressive sales tactics and sometimes engage in outright fraud, says Kenneth M. Donohue Sr., the inspector general for HUD. "I am very concerned that the same players who brought us problems in the subprime area are now reconstituting themselves and bringing loans into the FHA portfolio," he adds.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
FHA should be a bit pickier about who they allow to do FHA loans and all should be reviewed for a while ... If you get caught committing fraud .. you go to jail. Seems simple enough to me .. scumbags always focus on the weakest link of the system ... unfortunately right now that may be FHA.
 

Workbox

Elite Member
Joined
Mar 2, 2005
Professional Status
Certified Residential Appraiser
State
Colorado
Wow, they are just getting it..............UH. Who was the first here to say this? I Swear, this is so ridiculous. But, we are just Appraisers, what do we know? They deserve what they get.
 

Lloyd Bonafide

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Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
Does anybody know if FHA is still reviewing all appraisals? I hope so, because I have seen some reports recently that are atrocious, and it's obvious that the appraiser has no idea what FHA is looking for in a report. They need to boot many appraisers off their HUD approved list.

The last I heard, they were something like 6 months behind in reviewing appraisals, and with the volume they are doing this year, I wonder how they can keep up.
 

George Ellerman

Senior Member
Joined
Feb 21, 2005
Professional Status
Licensed Appraiser
State
Ohio
http://www.businessweek.com/magazine/content/08_48/b4110036448352.htm?campaign_id=rss_daily

FHA-Backed Loans: The New Subprime

The same people whose reckless practices triggered the global financial crisis are onto a similar scheme that could cost taxpayers tons more


" Some current and former federal housing officials say the agency isn't anywhere close to being equipped to deal with the onslaught of lenders seeking to cash in. Thirty-six thousand lenders now have FHA licenses, up from 16,000 in mid-2007. FHA "faces a tsunami" in the form of ex-subprime lenders who favor aggressive sales tactics and sometimes engage in outright fraud, says Kenneth M. Donohue Sr., the inspector general for HUD. "I am very concerned that the same players who brought us problems in the subprime area are now reconstituting themselves and bringing loans into the FHA portfolio," he adds.

So what else is new !
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Anyone who has observed--as the previous posters have--what has taken place during the past 10 and more years knows where all of this is heading.
 

Peter LeQuire

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Joined
Jan 3, 2005
Professional Status
Retired Appraiser
State
Tennessee
FHA has been, since its inception, in the business of insuring/encouraging loans to borrowers who were less than "prime." And, mortgage originators whose borrowers could not meet convetional underwriting criteria have - for decades - put those borrowers into FHA-insured loans. That's old news.

The new catalyst in the current mix is that nothing - or precious little - has been done about complicit appraisers. Lender selection of appraisers for FHA loans virtually guarantees that the same number pushing, condition concealing, crooked, thieving appraisers who were part and parcel of the production of fraudulent loans in the past will still be cranking out the same low quality appraisals for the same mortgage originators who will be dumping their fetid product into government-backed (GNMA) securities. Again, lack of enforcement of the long-existing statutes pertaining to fraud, in all jurisdictions, has allowed this to continue. So we're left with the same bad actors, the same crappy loans: the only thing new this time is a herd of posturing jerks who legislated this mess in the first place, and a few grandstanding enforcement dudes with grandiose ambitions.

But, I really don't have any strong opinions about this.
 

Scott Kibler

Elite Member
Joined
Oct 7, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
I now get calls most every day from pushy out of town brokers looking for comp checks. I've got one actual FHA order in the past few weeks, from an AMC that ironically had a decent fee but a turn time I couldn't hit. They pulled it.
 

Summer

Member
Joined
Jan 2, 2008
Professional Status
Certified Residential Appraiser
State
Connecticut
I would rather have the mortgage brokers any day over the AMCs working for the banks taking our fees.
 
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