The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout….
In the past two years, the number of loans insured by the FHA has soared and its market share reached 23% in the second quarter, up from 2.7% in 2006, according to Inside Mortgage Finance. FHA-backed loans outstanding totaled $429 billion in fiscal 2008, a number projected to hit $627 billion this year.
Rising defaults have eaten through the FHA’s cushion. Some 7.8% of FHA loans at the end of the second quarter were 90 days late or more, or in foreclosure, according to the Mortgage Bankers Association, a figure roughly equal to the national average for all loans. That is up from 5.4% a year ago.
Phew…I can see why. Anybody who has ever had to deal with the FHA doesn’t want to do business with them. I know I’ll never sell a house again to someone financing through FHA.
Bureaucratic nightmare in real estate form.
FHA is govt-sanctioned predatory lending. Borrower pays up-front mortgage insurance AND monthly m.i. of @ 1/2%… even if you have 20+% down. FHA is popular only because loan officers and brokers get rebates (called “service release premiums”) that make doing FHA very lucrative.