The Florida Mortgages market IS healthier than it was last year AND we may have learned some hard lessons from the recent financial crisis. Nothing wrong with learning lessons, some of them just come at a tremendous cost…like $13.6 billion.
The FHA’s annual independent financial report spouts all sorts of happy statements like “it is stronger today than it was last year” and about how the “FHA’s capital reserves held steady” and stuff like that.
All good news, but there’s also the seedy underbelly about how the seller-financed down payment assistance loans produced $6.6 billion in claims (and counting!!) and could actually wind up costing the agency in the neighborhood of $13.6 billion. That’s some neighborhood!
Mercifully outlawed by the FHA, the seller-financed assistance program is no longer with us, but the expensive lesson here is that home buyers need to have skin in the game because it certainly seems that the silver platter method to home ownership is not such a good plan.
But I’d be interested in seeing what the average credit score and the other financial vitals were of the borrowers that are behind these FHA loan losses. Perhaps vigilant due diligence in determining a borrower’s likelihood to repay their mortgage loan combined with the borrower having a literal interest in the future satisfaction of the loan would make all the difference in the world. What a concept!
At the end of the day, it seems to me that some safeguards (like reasonable credit score thresholds and borrower produced funds) might very well have mitigated these costly circumstances.