The Mortgage Crisis and the Trouble With the FHA
The Mortgage Bankers Association recently joined the chorus of those worried about the Federal Housing Administration’s growing role in the housing market, the
Jul 31, 2020107.9K Shares2M Views
The Mortgage Bankers Association recently joined the chorus of those worried about the Federal Housing Administration’s growing role in the housing market, the Orange County Register’s Mortgage Insider reports.Due to the mortgage meltdown and the demise of subprime lenders, the FHA’s share of the housing market already has increased from three percent to 20 percent and is expected to expand even more.
But for the past eight years, the government has downsized the FHA and reduced its role. Just like its parent agency, the Department of Housing and Urban Development, the FHA has basically been dismantled by the zeal of anti-government conservatives, and now is expected to turn around and perform at its peak.
This obviously presents some problems, among them a lack of controls in FHA lending programs that are resulting in subprime and predatory lenders getting back into the market, Mortgage Bankers Association President John Courson toldthe House Financial Services Committee.
From Courson:
“„But as we applaud FHA’s turnaround, that increase in volume is a double-edged sword that requires FHA and FHA-approved lenders to be more vigilant than ever about who is allowed to originate FHA loans. Much like you, we are concerned that some unscrupulous lenders may now be turning their attention to FHA and its programs.
Business Week recently calledFHA-backed lending programs “the new subprime,” and said unscrupulous lenders are taking advantage of lax oversight to get in on FHA lending. That creates the same problems that got us into this mess in the first place.
If this doesn’t make you nervous yet, it should. As Mortgage Insider’s Matthew Padilla put it, there could be another government bailout coming … of the FHA.
Rhyley Carney
Reviewer
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