The New York Times has reported an interesting development that many of us walked past a bit too quickly awhile ago–the FHA limits went up, and, if Rep. Barney Frank–you know, that fellow whose homosexual prostitute boyfriend ran a “Rent Boy” operation out of the Congressman’s residence, about the time that other fellow from MASS, Gerry Stubs, was doing really inproper things with boy minors in his own offices–(this goes back a few years and I digress a bit it seems)–and boy howdie the FHA is insuring loans where a sizeable portion of its portfolio is in default as we speak.

Not just insuring loans but for the middle and upper middle class and not the lower middle class family who might could afford a reasonable mortgage IF they could get around the requirement of having to pay 20 percent as a down payment or even a family who would run a small farm, perhaps. I sat up and read the story on my Crackberry scratching my head at 3 AM. A guy really ought not interrupt his sleep with such things as counting sheep is a poor substitute for anyone watching a system now set itself up for another massive government infusion of capital to preserve a broken system of things that truly cannot and will not be saved by anyone. Wait~! I went too far, too fast. Let’s build on earlier awareness first and then we’ll jump from the skyscrapers of Babylon.

The American Mortgage Bankers Association reported yesterday that about 10% of homeowners in the United States are delinquent on their mortgages. That, of course, comes nowhere near the proverbial tip of the iceberg because behind those in default are those. literally, crushed underneath a credit card debt and face VIR’s and other factors. The default rate is not likely to get much better soon in any event. The reality is prices are going back down on real property and, yet, the FHA is now betting they are going to go back up, creating this mythical thing that vanished off the cliffs of New York led finance awhile ago–EQUITY. (NY Times / U.S. Mortgage Delinquencies Reach A Record High/ David Streitfeld/ PUB 11/19/09 )

“The combined percentage of those in foreclosure as well as delinquent homeowners is 14.41 percent, or about one in seven mortgage holders. Mortgages with problems are concentrated in four states: California, Florida, Arizona and Nevada. One in four people with mortgages in Florida is behind in payments.”

Oddly, the majority of foreclosures are with prime, fixed-rate mortgages, which leaves one breathless as one considers the current VIR portfolio pending out there~!  As banks continue to grapple with these issues it seems scurrilous at best to reason that this won’t crowd out investment available for business startups and/or other credit aimed at bolstering the growth of full and meaningful employment. There is a metastatic cancer out there eating away–the better analogy is as “rust,” I think–growing all over this huge credit vine. One can almost see it grow as it moves to devour this plant called the American Economy. (Citing from “U.S. Mortgage Delinquencies …” NY Times/ David Streitfeld/ supra)

“There will be a lot more distressed supply entering the market, and it will move up the food chain to middle- and higher-price homes,” said Joshua Shapiro, chief United States economist for MFR Inc.”

The FHA, meanwhile, appears to be busy “masking” its loan portfolio with a flurry of new loans. (See: Streitfeld, supra) If one  disallows this statistical manipulation the FHA is facing enormous delinquencies in its portfolio, indeed it appears to be over 30 percent or more~! The underlying actuarial integrity of this policy is highly questionable as the FHA banks the premiums for its insurance. One can only wonder if this is not far akin to the Payday Loan to cover Payday Loan strategy and at some point there is that all-inclusive winding up payday that breaks the bank and misery rushes in like a cruel East Wind.

Americans simply do not grasp it, I suspect, where the important federal budget deficit–for this past fiscal year ending September 30–is nearly $1.43 Billion. One could hear the howls of jackals and wolves plainly as Timothy Geithner was verbally mauled and abused by a bunch of legislators at the Joint Economic Meeting Thursday (11/19/09). Others are busy blaming the Chinese, and other people, places, and things. Meanwhile, new unemployment claims are slowing down–to a mere 514,000 per week–for now.

Its like we have this giant stove and pots on it that are boiling. One goes off and governmental authority rushes in and turns the knobs and tries to clean up the mess, only to see another pot light off, and, on it goes, because if the stove goes off all at once–down it all comes. WHAM! Like a Giant Glittering Sword coming down as a Judgment with accompanying providential force, spasms of widespread negative impact upon certain things. Now  … let us pose this question and ask, are any or all of these “things” those things which might be classified properly as that which is as a “rotten tree” and, therefore, is destined for the fire?

~