Obama's idea of stimulus for the "working" class. Come on folks, he is trying to "create or save a million jobs" in the FHA.

The Federal Housing Administration agreed in March to insure mortgages for apartments at the 98-unit Gramercy Park development, known as Tempo. That enables buyers to make a down payment of as little as 3.5 percent in a building where apartments range from $820,000 to $3 million.

The FHA, created in 1934 to make homeownership attainable for low- to moderate-income Americans, is providing a lifeline to new Manhattan luxury condominiums after sales stalled. Buildings featuring pet spas, concierges and rooftop lounges are applying for agency backing to unlock bank financing for purchasers. The FHA guarantees that if a homebuyer defaults on his mortgage, the agency will pay it.

The change allows the FHA to insure loans in new projects where only 30 percent of units are in contract, down from at least 50 percent. About 1,900 apartments in New York's most expensive neighborhoods would be covered by the applications.

Our government is now like a gambling addict, who blows through all his cash, then hits the ATM until his balance hits zero, then pulls out his credit cards for cash advances, before making panicked phone calls to all his friends.

You might consider actually reading the article before you create the headline.

"The FHA's effectiveness will be limited in Manhattan because apartment prices are higher than in Brooklyn and the insured loan is capped at $729,750, Behin said. The median price of a Manhattan apartment in a new development was $1.4 million in the second quarter, according to Miller Samuel and Prudential Douglas Elliman.

"With apartments over $1 million, FHA isn't going to help you," Behin said. "You'd have to put down 30 percent to get the loan of $729,000. And if you have 30 percent to put down, a bank will loan to you without FHA."

I did read the article. You kinda have to when you cut and paste the first three paragraphs.

"In New York City, the priciest urban U.S. housing market, the FHA insures loans of as much as $729,750, and permits buyers to borrow up to 96.5 percent of the price."

I wonder how many mortgages in middle America could be insured just for what the FHA is shelling out to help Manhattan. I wonder how many families could have been helped in Kansas or Florida or Indiana for what we floated to keep AIG and Goldman bonuses going out the door.

That's some delegation New York has in Congress.

"I wonder how many families could have been helped in Kansas or Florida or Indiana for what we floated to keep AIG and Goldman bonuses going out the door."

I do too but I also don't pretend it wasn't necessary just because the man in the WH isn't who I wanted. I actually admit I supported TARP even though it was proposed by George Bush, partisanship gets ridiculous about this stuff. It is possible that had we allowed to big banks to collapse nothing would have happened but it isn't likely and it would have been crazy to risk it.

"I did read the article. You kinda have to when you cut and paste the first three paragraphs."

"Taxpayers Now Insuring Mortgages Up To 3 Million"

One or both of those two statements is false.

Can't imagine how the Schister's managed to Rangel that one?

The mortgage is insured for $3 million. That's what the FHA does--it insures the entire mortgage. The fact that the buyer has to put down a larger down payment for that amount just gives the borrower a larger cushion.

Suppose the apartment is $1,000,000, and the buyer puts down the statutory limit for the FHA's portion to be $729,000, or $271k. Then the mortgage goes into default: the FHA will repossess the home, pay off the bank's remaining balance of $729,000, and try to recover what they can at auction. Of course, it's only when property values fall below the mortgage balances that they go into foreclosure in the first place, thus the meltdown of the banking system: millions of foreclosures that can't possibly come close to what is owed on the mortgages.

Enter the FHA, who will let the bankers sleep better at night: we can continue to make million-dollar loans on 1,000-square-foot apartments when similar properties are changing hands at a fourth that twenty miles away, and now the taxpayers will make good our losses.

And we will. Remember when the FHA pretended to be all about the little guys? Farmers, plumbers, working-class borrowers. Those were the days.

"The mortgage is insured for $3 million. That's what the FHA does--it insures the entire mortgage."

Thanks for correcting me on that I honestly didn't realize that. I agree with you then about this whole thing, it is just a give away to banks then.

With apartments over $1 million, FHA isn't going to help you," Behin said. "You'd have to put down 30 percent to get the loan of $729,000. And if you have 30 percent to put down, a bank will loan to you without FHA."

I live in lowly Kansas where it is rare for a home to be valued over $1 million but who would use FHA for a loan they can put over 30% down?

wouldn't a conventional loan be better?

It's because the banks aren't making the loans. That's why the developers and realtors in NYC have been begging the FHA to change their underwriting rules.

When credit markets are functioning normally, banks are more than happy to lend on properties with equity. But they're not, because they can make 8 times on their reserves risk-free courtesy of the avalanche of new Treasury debt issuance.

The FHA also accepts high-risk borrowers with bad credit scores. Borrowers who have been foreclosed on, borrowers still trying to sell an existing property--an FHA guarantee is often the only way a bank will even consider making the loan. You can consider an FHA mortgage to be a risk-free loan for the bank, at a higher rate of interest than loading up on 5-year notes.

If either of you two goofs paied attention you would know the thread is already in existence.

"That enables buyers to make a down payment of as little as 3.5 percent in a building where apartments range from $820,000 to $3 million."

*doing the mental math.....
...3.5*8.2....
... moving a decimal....

Hey, that's not half bad. I could do that right now.

Now what would the mortgage payments be?

Wait, according to this thread that doesn't matter.

Awesome.

I gotta go call my realtor.

I think rich people should buy their own damn condos with their own money. If they can't afford it, too bad.

maybe there is a reason why housing is not afordable in New York, maybe it's because of stupid programs like this artificially increase demand and thus price. Just a thought.

Let the free market work!

"maybe there is a reason why housing is not afordable in New York, maybe it's because of stupid programs like this artificially increase demand and thus price."

The only time I ever feel like a conservative and am willing to admit it is with respect to rent control laws. Poor people's rent is regulated in NYC which drives up the rents for the rest of the city because people have apartments at way below market value.

And--some certain rich people have more than one rent-controlled apartments. Rangel has 5.

Just another desperate attempt to prevent deflation.

"Just another desperate attempt to prevent deflation."

Operative word..."desperate."