The article reports:
The administration’s policies and price cuts at the Federal Housing Administration – the latest coming on January 26 — are squeezing the private sector competitors. President Barack Obama and the FHA are engineering things so that just about anyone with a modest down payment who wants a mortgage needs Uncle Sam to get it.
FHA was originally conceived as a vehicle only for low- and moderate-income individuals seeking modest homes and mortgages who were not served by the conventional market. Today, FHA is insuring very large mortgages for people in all income brackets (including ones that absolutely can get mortgage financing in the conventional market). Thanks to prodding from the administration, the FHA mission’s has been transformed in a way that grows the government’s market share, puts private capital in the backseat, and exposes the taxpayers to even greater risks due to their 100 percent guarantee.
After the Dodd Frank law required that lenders to make sure borrowers have the ability to repay mortgage loans, the FHA loosened the standards for FHA loans. This is setting up the taxpayers to be the ones that will have to bail out those loans.
The article concludes:
Fool me once, shame on you. Fool me twice, shame on me. Together the Obama administration and the House and Senate committees looking at the whole business are setting the mortgage market on a path to where — as it now is with student loans — anyone who buys a house will have a government guaranteed loan. This is about as far from the founder’s vision of limited government as one can get. Instead, policymakers should be taking steps to strengthen the private mortgage insurance industry to minimize the exposure of us all to bad policy.