From Subprime to FHA Loans

While catching up on my reading, and I read an article in Business Week that is simply disheartening.

The Federal Housing Administration (FHA) is a federal agency that insures mortgage, where the rate of interest is regulated and loan is insured, to provide modest people with a way to purchase a house. As the subprime sector mostly vaporized, the same people who used to market subprime loans, re-brand themselves, receive certification, and become the people who now market FHA-backed mortgages. Unfortunately, the behavior that’s generic to the subprime business did not change and as one example in the article…

XXX was an unlikely borrower. She had no employment income when she bought a three-bedroom condo in Palmetto Towers, a Hernandez property in Miami, in July 2007 for $318,000. She borrowed almost the entire purchase price from Great Country Mortgage Bankers, XXX’s loan company…

Even though now the subprime has ended, the prediction is that as this goes on, in next few years, the same thing will happened with FHA-backed loans. I said that this is disheartening because of two facts.

1. The people who made mistakes seem to have no remorse, do not self-reflect, and are not hesitant to perform the same act.
2. The people who borrowed in this scenario and defaulted are numerous. Many never made one payment, and at most paid for the first 3 months. It is scary to know that so many people have little foresights of their financial situation and probably made the decision while they are blind-sighted by their desires to own a house.

This is the time where we need the change and as people repeat the same actions, it goes to demonstrate how much is inner change, real change is needed where people start taking responsibility for their actions. It is unfortunate and disappointing to observe the opposite. We can keep changing the outside environment, settings, policy, rules, but while we remain the same… the same thing will keep happening. Gah!

Not talk about the executives and bankers who are yet consumed by greed to chase after money, the people who bought the home in this case and had defaulted, surely have a strong desire for a home of their own. However, owning a house doesn’t make it a home.

I will talk more about the topic of home later.

Originally posted 2008-12-02 23:59:08. Republished by Blog Post Promoter