As reported today by CNNMoney, beginning April 1,2012 the FHA will be increasing the insuring fee it charges to customers. In fact the initial premium will rise by 75% and the monthly premium will rise by 9%. Recall what happened to Netflix when they instituted a lesser increase. If not I will restate the obvious for you which keeps getting lost in the fog by our leaders. They lost approximately 1 million customers. Our leaders think we are an endless well of cash. We are unwise to allow this thought pattern to continue but I fear the leaders have won via their persistent bribery with the sweat of others.
Now I have been in the home finance game for almost 30 years now and know from where I speak. With no ideological blinders on I can plainly state that virtually all the problems we suffer from in this industry was straight from Washington in the form of bad policy by Congress and even worse policy from the Federal Reserve. The bulk of the lunacy began circa 1996 when a few Clinton appointees decided to turn HUD as well as Fannie and Freddie in to social programs. Add a dose of Greenspan and the rest is history. I am sure it made them feel good at the time as they cashed in their multimillion dollar bonus’s while thinking they were healing a social injustice. They even cooked the books to enlarge these bonus’s. But they were let off the hook and now live large.
I know those predisposed to hate Wall St. and rich Bankers will likely not choose to believe this historical take but I can do no other than be intellectually honest. I saw it happen first hand and believe me did not like what I was watching. I once took pride in my field and by 2003 felt very dirty by association not action. And yes I know what Wall St. was doing but really they were diversifying stupid risk which was mandated on the banking world from Washington under fear of reprisal. Of course they stood to collect fees for their service but that has no bearing on how we got here.
Enough history on how we got to the last four years of utter despair and pain for many good and decent people. Houses lost. Jobs lost. Careers ruined. And we have yet to see anyone from either party implement a true market approach to healing this mess. As stated here before these leaders are totally incompetent. My industry colleagues and I have many solutions but no one will listen to us. At the end of the day we need a stimulation in home buying to ease the glut of inventory.
What would Walmart do if they had millions of microwaves to sell? As they always do they will discount them to the bone to clear room for fresh inventory. How about your local car dealer? I see the ads every week. Too many cars and all must go at any price. Sounds reasonable.
How are we dealing with housing. I will not bore you with the myriad hurdles and roadblocks in place by policies from the same jugheads in D.C. And most of you are aware of how difficult it can be to borrow .05 cents. This has to do with these idiotic policies primarily the one known as Dodd-Frank. Horrible stuff my friends. If you stop by your bank ask them how this is working for them. They will likely cry in fact for what it is worth, one of the most profitable and well run banks in the U.S has closed their doors as it was becoming too ominous to deal in such matters. Sad indeed.
Back to FHA. Talk about a bad move at the wrong time. Let us make it more costly to buy an item nobody currently wants to purchase. How is that for clear thought. I suspect most of you will not be surprised. And here is another little advertised secret for you. Remember that 2% cut in your social security withholding. It sure sounds good but guess who pays? Aside from your progeny, the balance of that short term cut has been added to the cost of a mortgage purchased by FNMA. In effect any new home buyer or refinancer is going to pay more upfront and the next 30 years. Ouch all around and a bummer for the industry as well.
And who gets hurt the most. Those precious first time buyers and many low income buyers our leaders proclaim to care so much about. They will likely be priced out of the market as the costs become prohibitive for them. Now does it get through that they are all full of…pick for yourself as the words I would choose are not printable in a decent society.
Article first published as <a href=’http://technorati.com/business/finance/article/fha-to-hike-fees-will-this/’>FHA To Hike Fees! Will This Stimulate Home Sales? No Way!</a> on Technorati.