FHA To Get $1.7 Billion In Its First Taxpayer-Funded Bailout (Demo)

By Gary Reber Uncategorized September 30, 2013

The Federal Housing Administration needs the bailout money to stabilize its long-term finances and cover potential losses on mortgages it insured from 2007-09.

The Federal Housing Administration has been working to improve its finances by tightening underwriting standards, even as it continues to try to assist the housing market by insuring mortgages with down payments as low as 3.5%. The FHA also recently eased restrictions on borrowers with past foreclosures, making it easier for them to get new home loans. Above, a foreclosure sign in front of a bank-owned home for sale in Las Vegas in 2010. (Robyn Beck / AFPGetty Images /November 8, 2010)

On September 28, 2013, Jim Puzzanghera writes in the Los Angeles Times:

The Federal Housing Administrationdramatically expanded its role after the subprime market collapsed, but at the expense of its own finances. Now, the government agency will get a first-ever bailout of $1.7 billion.

In a letter Friday to Congress, the agency’s head said it needed money to stabilize its long-term finances and cover potential losses on the huge volume of low-down-payment mortgages it insured from 2007 to 2009.

It’s the first time the 79-year-old FHA — created during the Great Depression to keep home lending flowing — will require taxpayer funding.

And it will get the money automatically. The FHA is financed by mortgage insurance premiums charged to homeowners and has been self-sustaining through its history. But it has the authority to draw funds from the Treasury without asking Congress.

We need to apply the proven principles of insurance to the financing of FUTURE wealth-creating, income-generating productive capital assets. We need to empower individuals to acquire multiple company diversification ownership facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept). The promissory note can be offset to the government’s central Federal Reserve Bank in return for the cash equivalent of the amount of the loan, less an administrative fee. The only cost to the direct lending bank in making a loan to the corporation would be the administrative fee, or about 2 percent of the loan’s principal and then another 2 percent for capital credit insurance, with an additional quarter of a percent paid to the Federal Reserve Bank to monetize the loan and give the lender the same cash as it would have had if it had actually loaned money to the corporation. The lender’s cash loaned to the company’s Employee Stock Ownership Plan (ESOP) trust and/or the individual Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) is replenished with the Federal Reserve Bank cash. When the company pays the ESOP trust or CHA enough money to enable the trust(s) to repay the lender, the lender has to retrieve the note and pay back the Federal Reserve Bank. Thus, the loan cost would be essentially not more than 5 percent to allow ownership broadening financial capital to be invested in ownership broadening ESOP and CHA trusts to create new capitalists. Thus, national capital credit insurance replaces the requirement for pledging past savings and security (which for the most part the most Americans do not have).

See “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624

http://www.latimes.com/business/la-fi-0928-fha-bailout-20130928,0,3852711.story

http://www.cnbc.com/id/101068629

FHA To Get $1.7 Billion In Its First Taxpayer-Funded Bailout (Demo)

The Federal Housing Administration needs the bailout money to stabilize its long-term finances and cover potential losses on mortgages it insured from 2007-09.

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