Monday, May 23, 2011

FHA insured loan burden

FHA insured loans
now cross a giant tipping point exceeding $1 trillion in book value at risk. The low down payment option with rising defaults that will require taxpayer bailouts of billions of dollars.
The FHA total book value of loans has soared to over $1 trillion. These are loans made with 3.5 percent down payments and carry laxer lending standards. So it should be no surprise that defaults for FHA insured loans are hitting record levels. The mission of the FHA was to make homes more affordable to lower income households which ironically are now a larger part of the U.S. population. However the FHA has been used as a conduit to increase loans in housing markets where bubbles are still persistent.

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