Poll results: If you controlled FHA
If you were in charge of the world -- or at least the Federal Housing Administration -- you would require that FHA-insured loans had higher down payment requirements. That was the most popular answer in last week's Wonk poll, which asked what changes (if any) you'd make at the agency, which is seeing rising default rates.
So: 42 percent of you opted for more money down. Here's what the rest of you poll-takers said:
Twenty-one percent think FHA lending rules are too restrictive. Loosen 'em up, you say.
Thirteen percent say the lending practices are just right.
Another thirteen percent say FHA ought to increase the minimum down payment and the monthly premiums.
And six percent are in favor of higher monthly premiums alone.
Two of you wrote in your own answers, which both happened to be the same -- stop lending.
I should've asked you where you were coming from, dagnabbit. Is it prospective buyers who are in favor of looser lending rules? Or sellers? Are renters or homeowners more likely to want the bar set higher?
Two readers who commented on the poll had different perspectives:
Justine, who says she'd like to buy a home in a few years, is squarely in the "more money down" group:
I find it hard to believe the government loans require only a pittance for a downpayment. According to the bank's standards, I could qualify for a mortgage waay more than I feel comfortable with, and it's not just because of job security worries. It costs a lot to maintain a home -- and you also want to have money for retirement, kids, the occasional vacation ...If we're all a little more conservative with our money, perhaps we can avoid re-creating the housing meltdown -- this time using government-backed loans.
Munchong said, "I don't think anyone can fault the FHA, Fannie or Freddie for much of the mess they are in now - I mean, the economy's already quite troubled, the job market is in poor shape and what kind of health, relatively speaking, would the housing market be expected to be in?? Skyrocketing? I mean really...Just when people need help, I think that's what these programs are for, ain't they?"
One thing's for certain: FHA is such a sizable part of the housing market now that anything it does, whether rule-changing or not, has an impact.
Of the home sales in the Baltimore metro area that were financed last month, 46 percent were FHA. That's more than conventional, which used to be the big mover. Its market share was 39 percent last month.
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Comments
The mission of the FHA was to help people who didn't have family to help them buy into their first home. No rich Uncle Charlie to lend or even give you the $10,000? well maybe Uncle Sam can do something instead.
But (and this is the tough part) that mission and most of the policies were established when wages (as measured by actual earning power) were better than they are currently or have been in the last twenty years as well as job security for where those wages were earned.
For many of the same reasons that health insurance reform is sought, that we just don't have the sort of relationships with that "good job" that our parents and grandparents had let alone the values involved... a recognition of this new reality, that the credit worthiness and repayment expectations for applicants is very different, needs to be included and probably done first or any other changes won't mean much.
Posted by: MrRational | September 13, 2009 11:32 AM