Editor, Manteca Bulletin

Just as you thought that the subprime mortgage disaster was starting to get squared away and that both private lenders and the government have learned their lessons, it’s all starting over again.

This time FHA is writing subprime loans with a mandate to ignore income requirements at a pace that has outstripped the previous subprime scams. This time FHA, in the name of “community reinvestment” is making home loans that will never be paid off. In many cases the underwriting standards are even lower than they were before the subprime collapse. In addition to FHA, there are more than a dozen loan programs available for the “underserved” that will loan as much as 125% of the property value to people who don’t have any verifiable income.

These programs are targeted primarily at urban areas with an emphasis on minority borrowers. They are promoted through organizations such as ACORN in addition to the usual urban government channels. FHA will need a bailout soon and it will not be a small one.