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Peter thanks so much so the possible FHA bailout mean to us the taxpayer here to Fox Business exclusive another one.
-- former FHA commissioner David Stevens he is now president and Chief Executive Officer at the Mortgage Bankers Association.
Thanks so much for joining us.
You know we're talking about another bail out here in the likelihood when you look at the numbers.
The reserves were still positive last year at two point six billion dollars now.
They're moving to a deficit of sixteen point three billion is the projection.
-- that it's pretty bleak -- what happens.
Well you know we're talking about a portfolio of well over a trillion dollars and sixty million dollars is a huge number but it's really driven by the fact that house prices are not recovering as quickly as previously thought and one thing that's very instrument in this actuarial is actually the loans originated in 201011.
Are expected to be profitable and actually help the -- But its loans that were done during the really bad -- in this country.
Before the housing crisis that are continuing to have the shadow effect on the FHA portfolio.
And that's what's driving.
This loss expectation that that's just been recently released and that secretary Donovan talked about today.
But -- -- the continuing to make bad bets as we go forward mrs.
part of this program to help people.
Buying houses in and you know help people who have little fight -- scores have had problems -- their past I mean.
-- -- their way of doing business and in your someone who sat at the Helm for a long -- -- -- either way of doing business.
Isn't sound for the American taxpayer.
I think it's too -- to make that determination there's no question that stress but keep in mind that.
You know Lehman Brothers failed Freddie Mac and Fannie Mae fell to the tune of a 150 billion dollars.
FHA is actually been a source of purchase money transactions -- the American home buyer but your point Melissa.
You're absolutely right in terms of past years in 20067.
Lenders took advantage of the FHA -- -- -- -- scores credit scores.
A very low.
They're there were very bad programs that were allowed in the -- we -- took advantage of the FHA how do you do that.
Well he would take advantage of the lowest credit scores that the program allows and you don't then -- -- -- today FHA don't.
-- -- that yeah I mean raised raised the credit scores and in the problem is.
Shaky lending on all fronts it and you know media is where private company that how to answer to shareholders are.
Was at risk of going out of business they would think more carefully about the kind of loans they were backing.
-- I think you're making an excellent point and you know it's a reflection on what happened broadly in the housing finance system that wasn't just FHA as we all know at this point it was.
Well I -- -- that conditions investors.
But FHA today the least the one benefit that they have -- they have a legislative obligation to -- breakeven and actually had a capital reserve which -- below right now.
And the law and the law demands of the secretary get it -- so they've put Michael floors in place for example.
But that's recent history it doesn't protect the factories still have hundreds of billions of dollars of mortgages originated over the past many years.
That are gonna plagued this fund for several years to come out of question is can they -- it can -- -- -- -- and what happens to offset.
Yeah I want to ask you before we run out of time because I'm very worried about my tax dollars tonight on a scale of one to money how likely is it that we're gonna have to bail out the FHA when he thing.
Well give -- -- I'd say between two and three but I'll give you two because.
There's some variables it can allow this thing to go through Woolsey okay.
Are your good sport thanks for doing that we appreciate -- I feel better with the to better -- right.
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