Nov 16, 2012|
What's Up on Wall Street - Deb Borchardt, The Street
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Good morning and welcome to the financial exchange very Armstrong in June night with you on a day. Well markets open I I almost hesitate to tell you I'm not sure I wanna know with the markets do. My suit yourself and those and again I may not getting attention and give up on the show on the and listen and they'll show. This not a lot happening Barry's so Condit on the Dow is down six points NASDAQ down four recipe flat oil up 41 cents tenured and tenure flatten. One point 603 gold and down that's surprised when he five dollars seventy cents to seventeen week. Look there's a lot of business news today in unity and unemployment claims at 439000. For the week which is just -- mind boggling number. But going unnoticed and none reported is the fact that the Federal Housing Administration is expected to report later this we elected mayor of moral. That is gonna run out of money. We're joined by Deb -- sharp from thestreet.com she's gonna help us explain how this could possibly happen good morning -- Are you so I think I have to ask you I mean this is the Federal Housing Authority how is it possible that they're gonna run out of money. Well they I have requirement that they have to have basically can protect patient and it really hasn't. Had technician for three years they're really going on for years that they haven't had enough money in order to recover. Delinquencies. And so far they've been able to manage it but all of the -- this year at the delinquent at least -- shot up in the loan. These little under 29%. Of the mortgage market -- it's not a small town goat of loans and he can't -- at a point that finger -- leader hi all -- people or quickly. Your odd night my side you know FHA a lot of first time -- use FHA in order to buy that property right. Right I mean at the top -- a lot of money to come output to try to do that 20% down -- -- they have been short of that amount of money for. Some time. And there is an audit report that they expect to come out on Friday and say you know what they may just need a bailout because they may not be able to. To keep going on -- played that there really didn't starting -- run out of money to cover these delinquencies. This has endeavor is this ever happened before it to your knowledge. Not to my knowledge now running they've always had pretty good reserve then and then you know we never really hadn't had huge accounting. Financial crisis that we had. That it is it isn't unusual. -- I think it really kind of stunned everyone when the ferocity. Of the delinquencies in the patent patent blown. It's -- one and pick that -- alone but is now thirty days to link what it looks because percent and it just ended September went up 12%. But they're they're the ones are the only game in town yet for bad credit people aren't as you borrow money from FHA I think with a a 620 credits which is not a good credit score. They have made changes. -- 2009. Going important a lot of that is still kind of old losing -- clearing out. But they did increase premiums. They didn't start to make people have a credit score five mediator lower on a more. You know they didn't start him make adjustments but they don't expect that those bad judgment are going to do. Bear fruit and dole it -- fourteenth. So what happens if these if these guys stop making loans I think he just said the 29% in new loans are coming through FHA. That this is going to be the death knell for the real estate market if FHA stops Macon -- Well you know another really good point that you bring up as the home -- the homebuilders have been actively. Promoting these loans so. Here you have a situation where you know you've got an agency that kind of on shaky ground. And then you've got home builders like KB home K and so I -- new home then we can make sure we can help you get that that they can't round. And it is -- -- that helped the situation when you have people really pushing. Even more on to an agency that's really just trying to cute you know. Survive it. -- so what's the event like today and hey I'm afraid to ask this question. They need political help to solve this problem -- the need congress to pony up more money so they can stay afloat -- more loans. I believe they would just go straight to the treasury it'll pick that they have to code to congress to request to. A bail out. My understanding is you know here's you know portrayed treated kind of our Linehan. -- -- the high. Mortgage backed out that. You know that they would have to step then and and build these guys now prohibited patent. That's the way if if it comes to that bad but it looks like what happened. You think Geithner or get the money. I can't see why you're now. Me I I had the housing market can't take ten or any imagine. Imagine -- 30% of the the -- new housing sales which are still weak right. If new housing sales declined to 30%. We'd be back in another depression. What you know I think that what you seen as the tank it kicked down the road and -- -- -- camp finally hit the curb and here we are you know at some point someone had to. I guess be the last guy in and the cane and and that seems to be the FHA. So other than that mrs. Lincoln how did you like to play. Yeah -- -- yet like you that at its aid to countries in the morning you know we've got. In Oakland and down from Wal-Mart we've got Middle East. Tensions escalating. Now. There's just so much happening right now and I think that. You know -- why he's not a market that down moments and state because this kind of -- coming out around the koreans' three in the afternoon. Are well Deb thanks for joining us appreciate your time. You notice June that dale a lot of these Middle Eastern problems started to percolate in great. It to a great degree after the election these digital content up on other than Lydia. President have a lot more flexibility. And ha ha. And I think these these have been percolating for some time I just think this is a timely. Things that's happened last few days. Com. Now there's plenty of local election remember we talked about the governor's plan to. Have you know housing development -- do but he. He had Dave it might might crack producer over there just I mean really on top of this game. Has arranged for a guest from the state of Massachusetts. To come and talk to us about this. Program you want it. Talk a little bit about your your special -- that's coming up on the showed -- fortunately I didn't have to do a lot of work with this -- because he actually just heard you open your mouth on the shell. And decided you know what I'm gonna reach out to them come and what correct you. Is this a correction of that area I don't take -- LA you're gonna have to pay attention listen I don't think it is at all. He's suggesting that it's something -- just thinking yesterday so we talked about some sort of a housing. The ball at all landed two. To expand housing by -- housing units and perhaps I think it would it would do suggestion was in the email that I mean it says some things -- context of current. I don't I didn't tell -- these guys have their bases covered one he was listening to. Immediately. Calls my cellphone and -- the voicemail and then immediately emails you fall. Now let's okay hey that guy in only if if I was wrong I'd be happy I'll be happy to admit I don't think I was June so. We'll try to rub salt in my say -- -- this witness I mean if this guy off quickly angry at realized it was an irate that -- -- that I think I've interviewed him before to Russia and China. -- with this we have got to look forward to the ages it's like relishing this whole thing awake and yet I call you how she she loves it when somebody comes in punches me in the nose. You we will have that coming up we'll also take some question what do we do this -- Why don't we in the next segment. Answer text questions from our audience has that yeah we got a ton of them. 68680. Is our text number my email address is -- Armstrong at wrko.com. Like always say every day we try to give you -- segment where you can ask your financial questions regarding 529 plants taxes. Look back periods going from five years to ten years whenever undermined Texas your question 68680. Is the number.