Here’s a letter appearing in today’s New York Times; it’s written by Alphonso Jackson, Secretary of Housing and Urban Development:
Re “B Is for Bailout, C Is for …” (editorial, Sept. 10):
When is the definition of a bailout not a definition of a bailout? When your editorial defines the term.
efforts to help homeowners in trouble through the Federal Housing
Administration are financed by insurance premiums that borrowers
themselves pay. This is not a bailout, nor a handout.
FHASecure product is designed for homeowners who were steered into
exotic mortgages they couldn’t afford when their original rates doubled
To qualify for the product, borrowers must have a
strong credit history and have made on-time mortgage payments before
their loans suddenly reset. We also require that they be capable of
repaying: no “no-doc” or “liar loans” here.
The premiums that
F.H.A.-backed homeowners pay go directly into our insurance fund, which
allows us to be self-sustaining. This ensures that borrowers, not the
government, remain responsible for the loans they sign.
Secretary, Department of Housing and Urban Development
I strongly suspect that there are costs that Mr. Jackson overlooks, but let me grant him the benefit of the doubt. If he’s correct — if the Federal Housing Administration truly is self-sustaining — it can be privatized. If it were privatized, its customers would continue to be served.