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Author: PosFCF Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 455860  
Subject: Re: Here We Go Again Date: 4/3/2013 3:03 PM
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If you ever saw a bank mortgage department trying to underwrite an FHA loan, you'd see why the need for a push. Banks, by default, are absolutely horrendous at underwriting to low income borrowers using FHA criteria instead of FNMA underwriting guidelines.

I have no doubt that if the derivatives people can sell a product that claims to lay off the risk of an FHA loan two things will happen: 1). the banks will fall for it again and; 2). The loans won't be underwritten to FHA standards. The follow on will then be that it was the President's fault and/or the gummints fault.

I was an FHA originator in the mortgage space (left it in 2001) who went to head the FHA mortgage origination departments for our county at two different banks. I left the first bank thinking the fault was limited to just that bank and their underwriters. When I left the second bank I knew it was the banking system, not just its underwriters.

5 or 10 years from now, when those who experienced the worst of the follies of 2008 are moved on to other slots, the derivatives business will point to this news release in much the same manner the "wonks" in 2008 & 2009 were pointing to CRA when 90% of the sub-prime loans were originated at institutions not governed by CRA.

And the big wheel just keeps on turning.....

Poz
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