No one likes their product or service called crap but that is exactly what Robert Toll, CEO of Toll Brothers called the FHA program at a New York home builders conference.
He also went as far as calling it a “definite train wreck,” noting that a “flag will go up in the next couple of months” for bail out money. As we pointed out last week they don’t have anywhere close to the reserves necessary to cover the current number of defaults. One in five of FHA loans is in default according to reports.
Everyone with any sense realizes that FHA loans have taken the place of subprime. What is even more aggravating is that mortgage brokers can typically receive higher commissions when pushing FHA versus many of the conventional products. If you are thinking about using an FHA loan make sure your loan officer has compared it to a conventional loan. Look hard at the numbers. You may be paying a lot more than you think.
- The Bank Slayer
