Robert Toll, CEO of Toll Brothers (TOL), the largest luxury homebuilder in the U.S., is cautioning that the Federal Housing Administration is going to end up as the next subprime mortgage crisis.
And with good reason, too:
Bloomberg: “Yesterday’s subprime is today’s FHA,” Toll said today at a New York conference for builders sponsored by UBS AG. “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.” Toll Brothers is largest U.S. luxury homes builder.
Alas, Housing and Urban Development Secretary Shaun Donovan disagrees strongly with Toll:
While the insurance fund’s capital ratio is at an all-time low, Donovan said those who say FHA is the next subprime- mortgage crisis are “dead wrong.” The quality of the loans FHA insures is “actually very good,” Donovan said.
We won’t decide for you which view is right, but we’d like to direct you to the story of Denise Tejada’s, here $183,000 loan and her 3.5% unemployment rate.