Carlin: Wall Street Owns Washington

Housing Recovery Is Real? FHA Needs 16.3 Billion Bailout So It Can Keep Insuring Loans To Deadbeats


After two foreclosures and two bankruptcies, Hermes Maldonado is as surprised as anyone that he’s getting a third shot at homeownership.

The 61-year-old machine operator at a plastics factory bought a $170,000 house in Moreno Valley, Calif., this summer that boasts laminate-wood floors and squeaky clean appliances. He got the four-bedroom, two-story house despite a pockmarked credit history.
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The last time he owned a home, Maldonado refinanced four times and took on a second mortgage. He put a Cadillac and Mercedes-Benz C300W in the driveway and racked up about $45,000 in credit card bills and other debts. His debt-fueled lifestyle ended only when he was forced into bankruptcy.

His re-entry into homeownership three years later came courtesy of the Federal Housing Administration. The agency has become a major source of cash for so-called rebound buyers – a burgeoning crop of homeowners with past defaults who otherwise would be shut out of the market.

“After everything that happened, thank God I was able to buy another house,” Maldonado said in Spanish. “Now, it’s good because the interest rates are low and there are lots of homes.”

The FHA, which backs nearly 8 million loans, is helping rebound buyers recapture the American dream, boosting the housing market in the process. But that’s touched off a fierce debate about the financial and ethical wisdom of bankrolling borrowers who contributed to the last housing bubble – and the potential cost to taxpayers.

http://www.pressofatlanticcity.com/business/real_estate/fha-helps-rebound-buyers-get-back-in-homes/article_2ef239cd-ecb2-5233-bcfb-7d759045ef9e.html