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Charfen Institute CEO Alex Charfen argues the FHA will likely get assistance it needs to keep recovery stable.
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-- take us right into our next guest from Austin, Texas out Sharpton joins us his Chief Executive Officer sharpen its -- the job.
Good to have you by the way -- in just the significance you think of an FHA bailout that comes to that as Peter says it can't be ruled out.
Yeah I don't think it's gonna be ruled that I'll make a very safe prediction and say that we probably will have some type of propping up of the FHA if you look at where we stand right now as -- economy.
We have a very modest recovery going and housing is driving a tremendous percentage -- all to GDP and our increase percentage in growth.
So it's most likely going to happen OK and the significance of it is in your mind watt.
Well the significance is is that what needs to happen is we need to take note that we are subsidizing FHA again.
And we need to overhaul not just of the expenses of the cash flow on the back end of the FHA.
But the front -- -- and lending while the FB OJ is is great for lower income borrowers.
We're still allowing people to buy properties what -- one.
After the close on the property -- upside down on that property and that's where we need to be cautious we need to allow people about properties that are safe investment.
That's the thing because we talk about -- -- all time these housing numbers that are showing improvement you alluded to moment ago that sales are going up.
But if people are only putting down.
You know what Peter alluded to -- the three and a half percent are we digging ourselves into a similar -- to the one we're trying to dig ourselves out of.
Yeah unfortunately when they already have on the -- percent of loans at the FHA has issued in the past ten years has increased.
Ten -- so it's gone up from about two and a half percent to 29%.
So when you look at that type of an increase and the increase exposure for the FHA.
There -- years in the past ten years were barely any FHA loans were written and today it's -- -- very big percentage of the market.
So what we need to do is probably prop the FHA up short term and then reform -- lending standards and at the expense of those want otherwise it ends ugly damn right or you -- -- your fearful of that at this point.
Otherwise you know -- we're going to be propping up the FHA every three to four years the math is simple somebody -- a property with three and a half percent down.
Because of that the cost of sale was eight to 10%.
That means they day they buy the property they're locked in their upside down their underwater -- foreclosure waiting to happen until property appreciate in many areas of the country you're not going to cover that for a number of months or years.
All right Alex -- to have -- -- by the way Alex charts and -- from -- with us thanks a lot.
Thank you --
