Is the FHA the next shoe to drop?

by Marilou Moursund on March 30, 2009

in Credit Crisis,Economic Indicators

I was very surprised to see that the Federal Housing Agency”s share of loans originated went from 2.0% in 2006 to about 30% by the 4th quarter of 2008.  I had always thought of the FHA, an agency run by the Dept. of Housing and Urban Development (HUD), as a relatively small player in the mortgage market.  The FHA insures loans for homebuyers who don”t qualify for Fannie Mae or Freddie Mac programs.

Defaults and delinquencies are on the rise, and according to the , the number of homes owned by HUD totaled 39,687 in January, up 22% from the previous year. 

This large increase has occurred even before the roll-out of the government”s new loan modification and refinancing program called Making Home Affordable.    The Administration needs to consolidate these various government programs and agencies for transparency and cost savings.

We would really like to see the mortgage market stabilize in order to become more constructive on the equity market.

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