I just ran into another tenant in my office building this morning – he is a mortgage broker specializing in sub prime lending. He just moved his office to his house due to the fall off in these types of loans. I asked him how the business was and he mentioned something about the growing popularity of FHA loans, referring to loans either made or guaranteed by the Federal Housing Administration. And then he made a chilling statement with a slight grin on his face:
“You know, FHA is the new sub prime.”
He then waltzed out the door, safe in the knowledge that his capital wasn’t at risk.
I have to do more research on this type of loan. I know a little bit about it – only 3% down payment required I believe. If anyone knows something about this type of lending, please comment and tell me we are not about to make the same mistakes again.
