The Neon Hippo

Here’s a quote from CNN about the bailout for homeowners.  This particular part is about the FHA’s role.

“Lenders would also agree to pay upfront fees to the FHA equal to 3% of
a home’s appraised value. Borrowers must agree to pay an annual premium
to the FHA equal to 1.5% of their new loan balance and they must also
agree to share with the government any profit they realize from selling
or refinancing their home.”  (read full article here….)

So basically financing a house worth $200,000 would cost $6,000 up front plus $3,000 per year for the privilege of getting the loan.  That’s bad enough but “they also must agree to share with the government any profit they realize from selling or refinancing their homes.”  Huh?

Let’s say I keep the FHA financed house for 5 years… I will have paid $21,000 to the FHA for carrying the loan and then I’m expected to share any profits with the government?!?  It sure seems like a bad deal to me.  The article doesn’t say how big a percentage the government gets, but anything over 0% seems unfair to me.  Why should the government profit from my house?  There’s something fishy going on here!

On a personal note - my current loan is FHA.  I hope these new rules don’t affect me retroactively, but I fear they probably will.  Given that the FISA bill granted immunity for past illegal actions, I have to assume that this will also affect people who are currently using FHA backed loans.  Changing the rules in the middle of the game without regard to the lives that are affected seems to be the new American way.  I think it’s time to vote all the bastards out and try again with a whole new crew.  We couldn’t do much worse by completely changing the roll-call of the federal government.