San Diego State University announced yesterday a new department for researching and teaching real estate, named The Corky McMillin Center for Real Estate.

The center’s director is Michael Lea, a Cardiff-based mortgage industry veteran who was a former chief economist for Freddie Mac. I first ran into Lea when I interviewed him for the second part of our “A Staggering Swindle” investigation earlier this year, the piece that showed the vulnerabilities of the real estate financing system:

Lea, the mortgage industry veteran, said he wasn’t shocked to see the system’s susceptibility to the efforts of a mastermind and more than 20 individuals to get these loans through.

“Certainly there have been and were at that time and probably ever shall be ways of gaming the system if you’re smart enough, particularly if it relates to fraud,” Lea said.

I caught Lea on e-mail last week to ask his thoughts about the potential need for a bailout for FHA, an issue I’ve been writing a bit about recently. He said the insurance on the loans that FHA is too low, and doesn’t effectively take into account the fact that borrowers are putting just 3.5 percent down payments on their purchases. Here’s more of his analysis:

I believe FHA will face significant difficulties going forward. … The economics support a significant increase in premiums to maintain solvency in the future but the politics of raising insurance rates in a severe recession are difficult.

I’ll be looking forward to sharing with you what research comes out of the SDSU center. Seems they might be trying to give USD’s Burnham-Moores Center for Real Estate a run for its money. I wrote about some of the research and analysis coming out of USD’s center last fall.


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