Obama's Mortgage Plan Adds to Housing Mess
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (TheStreet) -- Finally, some sunshine in housing. On Nov. 9, Ginnie Mae, a government corporation within the U.S. Housing and Urban Development (HUD), reported record earnings of $1.2 billion for the fiscal year ending Sept. 30. Ginnie Mae said it financed nearly 60% of all U.S. home purchases during the year. Credit was given to the FHA's increasing role; it insured about half of Ginnie Mae's loans.
The CEO of Ginnie Mae, Ted Tozer, an Obama appointee didn't mention that Ginnie Mae has been picking up the high-risk-loan slack from Fannie Mae (FNM) and Freddie Mac (FRE). According to the National Association of Realtors (NAR), Federal Housing Administration (FHA) loan-to-values (LTVs) have been rising to unprecedented levels. LTVs over 97% were 17% in 1991. Between 2000 and 2008 it rose to 51%. In 2010 it reached 68.2%.
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