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Numerous statistical reports are out today regarding the financial health of the Federal Housing Administration’s mortgage insurance reserve holdings accounts.  If on shaky ground, how does this affect California FHA mortgages, Los Angeles County FHA mortgages and San Bernardino County FHA mortgages? 

You can decipher these reports with an economist’s “chicken little” eye glasses on, or regardless of your political leanings, you can choose to be more pragmatic about the whole thing.  FHA Homebuyers don’t care about the billions here and there, they care about the roof over their heads and their children’s school district.

If  FHA falls below their minimum required cash reserves, there are various ways to cure such a shortage.  We’re not discussing politics today, we’re discussing millions of families that rely on FHA to help enable them to become homeowners.  FHA will not fail.

Talking Points

• Home prices in Los Angeles County are up for the 9th consecutive month.  Home loan stability relies in part on price stability.
• The United States’  and the world economy, recent history proves, rely profoundly on our housing market’s health.
• Forcing homebuyers to come up with significantly more downpayment than the 3.5% FHA minimum would crush our housing market.  Prices would plummet and only the “haves” with cash would be property owners and landlords.
• Any cashflow problems FHA is threatened with now should logically be alleviated when the economy recovers. Future FHA foreclosure numbers should improve dramatically and the re-sale values of any future foreclosures may also minimize their payout exposure. 
• Worst case scenario, FHA is too important to fail.  Current leadership is making risk management changes and so far refusing any discussion about government bailout of any kind.