So Let's Ponder the *Why* of Why Ben Wants Uncle Sam to Double Down on Housing, Shall We?

You're a disgrace, Ben.  Go home.  Clean yourself up and for God's sake, get off the sauce.

"Home prices will also play a key role in whether taxpayers will have to rescue the FHA, said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication.

“Given that most FHA loans are made with a 3.5% down payment, most are underwater within a year after price declines,” he said."

Guess who the lender of last resort was when the private sub-prime market went tits up?  You guessed it, kids - FHA.

"Wharton’s (University of Pennsylvania’s Wharton School) Gyourko argues that the FHA has underestimated the risk of these more recent loans. Many of the new serious delinquencies were from loans issued in 2009 and 2010 and he projects there will be many more defaults to come.  One reason is that many of the borrowers who took out FHA-backed mortgages during this time relied on the First-Time Homebuyer Tax Credit for down payments. A large percentage of these borrowers didn’t have enough cash for the small 3.5% down payment that FHA requires, let alone the money to make their ongoing mortgage payments, he said."

Much to Ben's chagrin, delinquency numbers do not tell little white lies...

"According to the report, the percentage of loans in the FHA’s portfolio with three missed payments or more rose to 9.3% in November, up from 8.4% in August."

But don't worry.  I'm sure the FHA has factored that into it's long term strategic planning and set aside enough in reserves to cover the losses without having to put its' hat in its' hands and go begging for a taxpayer funded bailout....

"In November, an independent audit of the FHA’s finances found that losses from mortgage defaults had depleted the agency’s reserve fund to 0.24%, or $2.6 billion, during fiscal 2011 — well below the Congressionally-mandated 2% level. (The ratio measures the net worth of the reserve fund compared with the value of the loans FHA has insured.) In 2006, the reserve fund stood at 7%."

Whoopsies!!!!

Guess what?  The well of good will within most responsible people to "help out their free wheeling neighbors" is just about run dry.  Mine went bone dry a long time ago.  For those of you familiar with Aesop's Fables - we might well have reached the point where the frugal and hard working ants tell the devil may care grasshoppers to go eat shit and starve/freeze to death already.