It is time to call "BS" on the so-called "reform" in the mortgage lending industry, along with the government's "progress" in this regard.
The current FHA report is now out for servicing delinquencies and defaults, and as expected it is indeed worse, not better. The administration continues to LIE about claimed "improvements" in the character of home finance.
22.9% of all FHA loans are either delinquent or in foreclosure.
Here's the previous report:
Let's see - 30 days are up, 60 days are up, 90+ days are up, default+foreclosure is up and 60+ including foreclosures are of course up.
Improvement? Where? This is current as of August now and the internals continue to deteriorate.
Why? Try this on for size:
This is directly from HUD's web site, which links to a Ginnie Mae calculator for an FHA loan. Assumptions were $50,000 annual income, married, 2 dependents in San Francisco, no declared reserves, one car with a $300 payment monthly, approximately $5,000 in credit card debt at a 5% minimum payment and $100 in additional monthly debt payments (e.g. student loans, etc.)
A lower-income person in California.
Ginnie claims that this person can spend 36% of their gross income on housing, or the front-end ratio (they also include $342 monthly for other housing-related costs, presumably homeowners insurance and utilities) and 49% of gross income on housing and all other mandatory debt service, or a 49% DTI.
This is preposterous. Such a loan will leave this couple with $1800 in monthly income - pretax!
Now let's take out the required FICA + Medicare tax and $322.91 comes out off the top monthly. This leaves you with under $1,500 monthly.
From this you must pay:
- Federal and state income taxes
- Car registration and insurance
- Child care for those two dependents
- Food
- All other employment-related expenses (transportation, whether in your vehicle or mass transit, uniforms or clothing as required, etc.)
- Health insurance contributions (if covered under an employee plan) along with all co-pays and other non-reimbursed expenses.
