I actually made this call close to two years ago, on NJ Real Estate Report. You gotta believe it’s as sure a bet as the sun coming up tomorrow. Given the fact that: 1) a buyer who puts down only 3.5%- then has the seller give it back to pay closing costs- is underwater the minute the ink dries on the closing documents; and, 2) all the originators, brokers and processors who brought you the subprime phenomenon moved over to FHA when the water was adjudged to be suitably warm…and we have all the elements in place for a 10-megaton financial discharge that should pretty effectively kill-shot the economy.

If you think this is overstatement, just repeat this to yourself a few times:

“The only viable mortgage insurer left in the United States is the taxpayer.”

FHA has added to the general sense of impending doom by issuing a statement proclaiming that everything is just happy-happy-joy-joy. Even though they are tapped out of cash reserves: