Solano Real Estate Scene: Time is now to revamp FHA mortgage insurance requirement

Solano Real Estate Scene: Jim Porter

Article By: Jim Porter – February 10, 2023

Diversity is where everyone is invited to the party. Inclusion means everyone can contribute to the playlist. Equity means everyone is given the opportunity to dance/experience the music.

I found these definitions on Google recently and hope this column is somehow read by Rep. John Garamendi, D-Walnut Grove, our Democratic Party U.S. Sens. Dianne Feinstein and Alex Padilla, and Democratic Party Housing and Urban Development Secretary Martha Fudge.

The “left” has been campaigning for years about how unfair it is for the poor in our country and the “right” has been campaigning for years about how spending and higher taxes is not the solution to our poverty problems. One thing both sides agree on is homeownership is the key to a strong middle class.

Fifty-two percent of all Americans older than 55 have no pension plan, 401(k) or IRA. This fact is horrible for the “haves and the have nots” because advancements in health care have all these folks living to an average of 89 years old. The elderly retired “haves” will be taxed to pay for the elderly retired “have nots” and the “have nots” will suffer living on Social Security and government assistance unless they are lucky enough to own a home free and clear, or lucky enough to have financially successful adult children to support them.

The FHA home loan program is not welfare. As a matter of fact, it’s the opposite of a handout; it’s a hand up.

The FHA loan program is a federally owned mortgage insurance company that has made huge profits over the past few years and is sitting on four times the amount of capital reserves required by the statute, because they have been overcharging low- to middle-income families with expensive mortgage insurance premiums for years. Every private mortgage insurance company in America moved to risk-based pricing 10 to 15 years ago and yet the government program that many of my first-time homebuyers desperately need because they don’t quite qualify for the conventional loan options via Freddie and Fannie is still charging one price for all at a much higher price.

It’s almost unconscionable that Congress, politicians and HUD all talk about homelessness, poverty and housing affordability while they do nothing about this government ripoff happening to the people who need an FHA loan for the long-term financial security that homeownership provides.

The FHA loan program is a non-issue in areas like Santa Barbara, San Francisco, Newport Beach and Silicon Valley, where all the big political donors live, but in places like Solano County, FHA is a way for people who work hard to climb up into the middle class and avoid retiring in poverty with a home free and clear when they turn 70.

Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.