FHA now backing apartments in Manhattan with a price tag of $820,000 to $3 million with a 3.5 percent down payment.

doctorhousingbubble,
The Federal Housing Administration (FHA) was created in 1934 during the Great Depression to give low to moderate income Americans a chance at pursuing the American dream of homeownership. Even in the best of times, the FHA was only a small fraction of the mortgage market as it was never intended to be a big player. Today the FHA now backs 30 percent of all loans outstanding and is quickly burning through its reserves. You would think that the FHA would try going back to its core mission of helping those it initially set out to help. Instead, it is now being used as a backend tool to fund absurd mortgages that don’t fit into any other current government loan programs.

In Southern California, where the median home price is $300,000, 4 out of 10 loans made since May of 2009 have been backed by FHA loans. This is happening in a market that is 65 percent more expensive than the nationwide median home price. Think this is bad enough? Now the FHA will be funding loans for apartments out in Manhattan that have market rates of $820,000 to $3 million. That FHA sure knows how to stick to their mission statement: (more)