We Have Nothing To Worry About
The Government Will Fix
The Financial Crisis

by Rob Aubrey on May 1, 2010

Congresswoman Waters from California serves on two House committees and their various subcommittees:

  • Financial Services Committee
    • Chairwoman, Subcommittee on Housing and Community Opportunity
    • Subcommittee on Financial Institutions and Consumer Credit
    • Subcommittee on International Monetary Policy, Trade and Technology
  • Judiciary Committee
    • Subcommittee on Crime, Terrorism, and Homeland Security
    • Subcommittee on Immigration

It is important to understand that what is called the “Fed Rate” is a short term rate and is not directly tied to mortgage rates.

It is for overnight lending. Short term rates affect short term rates. Long term rates affect long term rates.

Now all economics are tied together eventually.

But as someone that is serving in the Congress and especially on the Financial Services Committee she should have some working knowledge of the system.

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She claims that she saw something on TV and has talked to some people.
Now remember she was adamant for some sort of assurance that rates would not go up.
OK Now what has Congresswoman Waters been up to?

H. R. 5072

To improve the financial safety and soundness of the

FHA mortgage insurance program.

IN THE HOUSE OF REPRESENTATIVES

APRIL 20, 2010 Ms. Waters (for herself, Mrs. Capito, Mr. Frank of Massachusetts, and Mr. Al Green of Texas) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To improve the financial safety and soundness of the FHA mortgage insurance program.

FHA is actually pretty stable and has had a recent short fall on reserves. Not because of defaults but because there were not a  lot of FHA loans being used in the recent past.  Buyers were buying homes with exotic sub prime loans, homeowners were re-financing. So the amount of insurance premiums that were being collected had fallen. More recently the number of FHA loans have shot up. So the short fall has more to do with the sudden swing. So the wisdom of the Financial Services Committee will be played out below.
Well Maxine Waters is sponsoring a Bill and her committee has approved it and it has been passed to the House floor. This Bill would allow FHA to raise its mortgage insurance from .55% to 1.55% which is in effect raising interest rates H E L L O! btw FHA already raised it’s Up Front Mortgage Insurance Premium UPMIF from 1.75% to 2.25%
5% $1,074.00 5% $1,074.00
MI at .55% $92.00 MI at 1.55% $258.00
Total $1,166.00 Total $1,332.00

The table above shows the difference between the two loans with the same interest and the increase in FHA’s mortgage insurance. It would affectively raise what is a payment rate from 5.75% to 7.010%.

How does this help the consumers and the current economic situation? It doesn’t!

It is just another form of tax to fill the coffer of the Federal Government for more squandering.

What’s worse is rates will eventually go up. Rates have been kept low because the FEDs were the ones buying the mortgage backed securities and that ended March 31st.

The historical averages of mortgage interest rates has had some dramatic swings.  There have been extreme highs and extreme lows.

The extreme highs were around 18% and the extreme lows were around 4.5% .

We are approximately 5-5.25 which means we are near the extreme lows. The “annual average” since 1971 has been around 8.75% RATES WILL GO UP!

In case you missed it at the top of the page, she is on the Subcommittee of Crime, Terrorism and Homeland Security and another Subcommittee on Immigration.

Sleep Tight!

Tagged as: FHA, Mortgage Interest Rates

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