As we spend the end of the year debating the merits of the various plans to save the subprime borrower, I need to add a dose of reality to the Realty Check.

On December 6th, when President Bush announced the brand new Paulson Plan to freeze certain subprime mortgages at their “teaser” rates, a little factoid got lost in the shuffle, and the trouble with this factoid is that it’s not exactly a fact.

The President, while touting the Paulson plan, also took the opportunity to plug the Federal Housing Administration’s plan called “FHA Secure.” This program was announced in September, giving FHA greater flexibility to offer refinancing to homeowners who have good credit but cannot afford their current payments.

“In just three months, the FHA has helped more than 35,000 people refinance,” Mr. Bush announced, “and in the coming year, the FHA expects this program to help more than 300,000 families.” Wow, that seems like an awful lot of help in just three months. I think a lot of us glossed over that because we were so busy with the numerous details of the other plan, the Paulson Plan.

Here’s the truth: FHA Secure has receive about 3,000 applications from homeowners who are delinquent on their loans and has closed on about 600 since September, that answer from an official HUD staffer who gave me the actual numbers after more than one request.

Wait, how is 600 translated into 35,000??? I know the President is prone to grammatical errors, but not usually numerical ones. (I’ll also add that another reporter was given the number 266, reportedly by HUD as well).

It seems that at some point this fall, the folks at HUD or FHA or somewhere decided to pool all loans made by the FHA under the “FHA Secure” umbrella. A rose, by any other name. So yes, since September, the FHA has backed 35,000 loans, the vast majority of which were in no danger of default, but were just normal loans, and that’s pretty close to a normal three-month period.

As for the 300,000 families Mr. Bush said would be helped next year, well only about 60,000 of them would end up as borrowers who are in trouble on their loans. That’s still a lot, but I just want to set the record straight.

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