DALLAS -Federal Housing Commissioner Brian Montgomery just made his case to the National Association of Real Estate Editors meeting here that much of this subprime crisis now damaging the housing market could have been avoided if Congress had dropped its partisanship fights and passed proposals two years ago to modernize FHA lending.
Indeed, FHA lending almost disappeared in California during the run-up in housing prices because the FHA limits on loans were well below home prices. So the private sector jumped in with subprime and now we know the results.
Now the wheels are moving in Washington, finally. FHA is seeing changes that allow it to back more loans now for the people who need them.
Montomgery said the problem now is that many people don't know about FHA programs that can help them - even help them avoid foreclosure.
He noted that FHA is sending out 850,000 letters to people with subprime loans that are resetting. He asked the media to help get the word out.
His indictment of Congress was pretty tough. We've heard a lot the last couple years about Washington gridlock and petty partisan bickering. Failure during that time to modernize an old government standby is part of why we're in serious straits now with housing and the economy. NOW they're trying to act fast when, as the old saying goes, the barn door is open and the horse is long gone.