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Here’s a letter [2] 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.
Our
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.
The new
FHASecure product is designed for homeowners who were steered into
exotic mortgages they couldn’t afford when their original rates doubled
or tripled.
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.
Alphonso Jackson
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.