Hold all parties accountable (borrowers/loan holders/policy makers). STOP THE BAILOUTS
Thanks for your suggestion. HUD does not provide bailouts to any participant in the market for FHA Single Family Loans. Each party to an FHA mortgage transaction bears the risk and associated costs for the decisions it makes and actions it takes.
While FHA does insure single family mortgages, and pays claims to the servicers of those loans in the event of default, like any other insurer, the FHA charges an actuarially sound insurance premium that ensures aggregate solvency of the FHA Mutual Mortgage Insurance Fund. Only a small fraction of FHA-insured mortgages actually default, and the insurance benefits the FHA pays to a servicer in that event correspond to a carefully priced insurance premium charged to all borrowers, the vast majority of whom are successful in remaining current on their loans. This model for mutual mortgage insurance has been highly successful for decades not only in making homeownership a possibility for low- moderate-income borrowers and first time homebuyers, but also in serving a critical counter-cyclical role in the broader housing market.
With regard to struggling borrowers, the FHA has a robust menu of loss mitigation tools designed to help those borrowers who have a reasonable chance of remaining in their homes to do so, while helping other borrowers successfully transition to other forms of housing. However, none of these options currently involves principal forgiveness of FHA-insured mortgage debt; the most aggressive form of retention loss mitigation available to FHA-insured borrowers involves principal deferment in the form of a second lien that is expected to be repaid upon extinguishment of the first lien.
Nina Waters-Sherrod commented
This is a great point, since it is hard for someone who has worked all their lives, paid taxes and maintained structures for their family, it is sad that becoming a first time homeowner is shadowed by the what if's and the didn't keep up with their payments. The ones that pay are struggling and trying to stay above water. And then the ones living beyond their means, now want a handout.
Susan Ingram commented
Bailouts don't work. Start taxing the speculators. I sympathize with homeowners in foreclosure due to life changing circumstances. I have no sympathy for someone who borrowed irresponsibly so that they could live the high life. The banks share some responsibilty, but it comes down to personal responsibilty too. Maybe we need another GD, to get us back on track and realize what is most important in life. The banks are taking the fall for the fiscal irresponsibility of some American citizens and unscrupulus business people who think shelter is a commodity. We forget that many of the foreclosures are on properties people rented from investors. Where is the protection for them?
Phil Hebenstreit commented
This is for HUD ideas, HUD does not control the bailouts
I believe there should be accountability. However accountability without compassion is just plain mean. Accountability should be different for the family who overextended themselves on a mortgage and a bank who sold bad loans and then flipped them for profit.
I agree with Mr. Streeter in his comment about the situation is graver than the slogan but I also disagree that the gov't should continue with the bailout. Trillions of dollars have been spent to "stimulate" the economy and so-called "bail outs" but our economy is still at the bottom. Housing prices are still at historic low and the rate of foreclosure has not improved. The old saying "If you keep on doing the same thing, you will continue to get the same result." I'm not an economist and the first to say that I don't know what the solution would be. I'm a taxpayer and a fiscal conservative. I don't like to see my hard-earned money being taxed just so it can be given to corporations under the guise of a "bail out".
Bradley Streeter commented
No one likes the bailouts, but do you really want another Great Depression? That is what happened the last time we "held all parties accountable" and let the companies fail en masse. This situation is a little more complex than the simple slogan of "Stop the Bailouts". What ideas do you have that won't lead to an economic meltdown?