Tuesday, July 14, 2020
Hawai'i Free Press

Current Articles | Archives

Sunday, January 29, 2012
FHA Bringing Subprime Jumbo Mortgages to Hawaii
By Selected News Articles @ 12:57 PM :: 6991 Views :: Energy, Environment, National News, Ethics

FHA increases size of mortgages it will insure

by Kathleen M Howley, Bloomberg News (excerpts)

In Honolulu, on the southern coast of the island of Oahu, there's a four-bedroom home priced at $785,000 that has views of the sun setting over the Pacific Ocean. The beaches of Waikiki are 15-minutes away.

Starting this month, the property is available to buyers with a subprime credit score, limited cash reserves and a 3.5 percent down payment using a loan backed by the Federal Housing Administration. Without the agency, a buyer would need a 20 percent down payment and an unblemished financial history for a jumbo mortgage.

The FHA is betting housing can recover enough to expand financing and earn bigger fees to revive its record-low capital levels. The agency increased the size of mortgages it's willing to insure to as high as $793,750 in Hawaii and $729,750 in the costly real estate markets of states including California, Florida, and Virginia. In his State of the Union address on Jan. 24, President Barack Obama proposed a new refinancing program that may expand FHA's responsibilities, and risks, even further.

It's "not the best time to begin guaranteeing houses that the average American couldn't afford," said Anthony Yezer, director of the Center for Economic Research at George Washington University. "It may be that the insurance fund even now is insolvent."

Obama told Congress he would send it legislation that would allow all homeowners to refinance their mortgages to take advantage of record-low interest rates. The proposal, and the congressional mandate, come a year after officials vowed to shrink the role of government in the mortgage markets.

The initiative would apply to all borrowers, whether or not their loans are currently government-backed, with details still to be worked out, according to senior administration officials, who asked not to be named. Neither Obama nor the officials specifically said FHA would insure the private mortgages that refinance, though that was a conclusion drawn by analysts including Mahesh Swaminathan of Credit Suisse Group in New York….

"Our preliminary interpretation is that the program is aimed at refinancing borrowers with underwater private label mortgages into FHA loans," he said in a note to clients this week….

Slight declines in home prices could wipe out equity for a home bought using the FHA's 3.5 percent minimum down payment, increasing the risk of a default. Michelle Meyer, Bank of America Corp.'s senior U.S. economist, last month forecast a 3.5 percent drop in home prices this year.

In the case of a default, larger home loans put taxpayers on the hook for bigger payouts on luxury properties many can only dream of owning, Yezer said. In Hawaii, home prices in the third quarter dropped 2.3 percent from a year earlier, according to the Federal Housing Finance Agency….

"We're already at the point where the FHA is raising fees on current borrowers to make up for past mistakes, and these loans have the potential for much bigger losses," said Yezer. "If people really want to buy a $700,000 house, maybe they should save the 20 percent down and not rely on taxpayers, or else they could buy something smaller."

Three years after Fannie Mae and Freddie Mac were seized by the regulators, the agency that backs a third of U.S. home loans is straining to meet its federally mandated capital reserve level, said Edward Pinto, a housing specialist at American Enterprise Institute who was Fannie Mae's chief risk officer in the 1980s.

By law, the FHA must maintain a 2 percent capital ratio, measuring assets against risks. The current measure is 0.24 percent, according to an independent actuarial study by the IFE Group. The findings were sent to Congress by the Department of Housing and Urban Development two weeks before members voted to restore the record-high caps after they expired last year….

About 84 percent of the U.S. is covered by the FHA's standard loan cap of $271,050, said Brian Sullivan, an FHA spokesman. The higher limits in some regions is based on their median home price. The highest cap in the continental U.S. is $729,750….

read … FHA increases size of mortgages it will insure

Learn from History: How the Democrats Created the Financial Crisis

NOTE: In Hawaii, First Hawaiian, ASB, and Bank of Hawaii avoided the sub-prime mortgage crisis because they did not make subprime loans in the California market. Hawaii’s land trusts, working hand in glove with bought and paid for environmentalists, have successfully kept Hawaii real estate prices high by restricting availability of new land.

Here is what happened to Central Pacific Bank, the one Hawaii bank which DID invest in subprime mainland mortgages:


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

808 State Update AM940


ACA Signups Hawaii



Alliance Defending Freedom

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii



Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust 

Build More Hawaiian Homes Working Group

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute


Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

CSIS Pacific Forum

DAR Hawaii


DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii


Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute


Hawaii Aganst Assisted Suicide

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation

HI Coalition Against Legalized Gambling



Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube


Hump Day Report

I Vote Hawaii

If Hawaii News

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes


Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group


Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii



National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Hawaiian

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii


OHA Lies

Opt Out Today


Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons 

Pro-GMO Hawaii



Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii


SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Cope

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu


West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii