Ed Pinto of AEI Warns of Looming Housing Crisis Collapse

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Ed Pinto of AEI, appeared on Fox & Friends on June 19 to discuss the future of Fannie and Freddie post housing crisis, if we can accurately classify our economy as such, and warns of the looming housing crisis as a result of policy from the Federal Housing Authority.

In the second video Ed highlights the new danger that is the FHA. A few months back, in “Here We Go Again: Can’t Teach An Old Government New Tricks,” I took a minute to address some of Mr. Pinto’s claims, and the implications from the liberal policy-induced housing crisis on our economy, and how it has devastated the minorities.

However, this travesty will go unreported, thus the fact that you are hearing about the FHA probably for the first time, or at least in detail right now. Take advantage of the FHA policy studies and statistics below, after the second video and commentary.

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On May 10, Ed Pinto warned of a looming housing collapse as a result of FHA picking up right where Fannie and Freddie left off.

The National Association of Realtors, says they “oppose any changes to FHA that will cause disruptions to the housing sector.” Naturally, they mean any change that will cause a disruption in the flow of dollars to their bank accounts. Yet, true to the liberal doctrine, they actually run ads like FHA Facts pretending as if they care about minorities and “responsible” first-time homebuyers. Thank god for liberalism. What would the poor minority communities do without them?

Recent FHA WATCH Releases By AEI

Forty percent of recent government-guaranteed modified loans redefault within 12 months

Explore the Nightmare at FHA project.

In another example of the Federal Housing Administration’s (FHA’s) mission failure, the redefault rate after 12 months on government-guaranteed modifications (government mods) hovers around 40 percent for loans modified in 2010, 2011, and 2012. This is double the failure rate for all other loan mods made by the government-sponsored enterprises (GSEs), private investors, and portfolio lenders. Government mods relate to loans insured by the FHA or Veterans Affairs (VA), with a high proportion relating to the FHA. Notwithstanding this stunning level of failure, another 36,000 government-guaranteed loans were modified in quarter 4 2012.

This Month’s Features

Continuing the Nightmare at FHA
The National Association of Realtors Calls for Unsustainable FHA Lending

Spotlight on Insolvency 
FHA’s Estimated GAAP Net Worth Equals –$27.36 Billion, with a Capital Shortfall of $47–67 Billion

Spotlight on Delinquency 
Overall Rate Declines to 14.68 Percent

Spotlight on Best Price Execution
FHA, VA, and USDA’s Pricing Dominance Increase

Spotlight on FHA’s Mission Misfires
Forty Percent of Recent Government-Guaranteed Modified Loans Redefault within 12 Months

End the Nightmare at FHA
Common-Sense Reform of the FHA Is Urgently Needed

Government Accounting Principles: Neither Accounting nor Principles

Read Volume 2, Number 3, March 2013.
Explore the Nightmare at FHA project.

Much misinformation exists regarding the rigor of the Federal Housing Administration’s (FHA’s) capital adequacy standards compared to the private sector. Recently, this statement was made at a House Committee on Financial Services’ Insurance Subcommittee hearing:

The requirement of FHA to hold 30 years’ worth of expected claims is 30 times more than that required of banks, which are only required by the Financial Accounting Standards Board to hold one year of reserves.

Any private financial institution that proposed to calculate its capital in the same manner as the FHA would be stripped of its charter before being escorted out of the room by its prudential regulator.

This Month’s Features

Spotlight on Insolvency
FHA’s Estimated GAAP Net Worth Equals –$30.63 Billion, with a Capital Shortfall of $51–71 Billion

Spotlight on Delinquency 
Overall Rate Declines to 15.21 Percent

Spotlight on Best Price Execution
FHA, VA, and USDA’s Pricing Dominance Increase

Spotlight on Government Accounting Principles: Neither Accounting nor Principles
Comparing the FHA’s Safety and Soundness Regulatory Regime to the Private Sector’s

End the Nightmare at FHA
Fundamental and Comprehensive Reform of the FHA Is Urgently Needed