Go figure.  FHA borrowers are defaulting at a 30% faster rate than non-FHA borrowers.  Shocking!

Since the FHA only requires a 3.5% down payment and the seller can chip in 3-6%, home buyers can move into a home for…drum roll please… all together now… Zip, Nada, Zero!   Not much skin in the game huh?

The FHA is facing mounting losses but officials claim they won’t need a cash infusion unless the economy slips back into a recession.  The FHA’s reserves for defaults has dropped to $3.6 billion.  But it’s OK because at least they know they have a problem; Housing Secretary Shaun Donovan says, “It is critical that going forward, we build that cushion back up.”

Ok, riddle me this and see if our officials are smarter than a 5^th grader.  Currently, there are $685+ billion in outstanding loans and 17% of these loans are in default.  How much money does the FHA need to have in the drawer to cover their losses?  Survey says…$89 billion, ding ding ding you win!  Wait didn’t they say they only have $3.6 billion.  Houston, we have a problem.

What do you think we should do?!?

- The Bank Slayer