[quote=Arraya]They also fail to mention that the FHA’s mortgage insurance is more costly (and can handle a higher default rate WITHOUT passing that on to taxpayers) and that the FHA historically “cures” defaulted loans at a higher rate than the banks.
None of which addresses the fact that the loans that are going heavily bad on the FHA side are the 0 down (through seller funded DPA) loans to folks with sub 620 scores – which simply aren’t available any longer. As far as I can tell, this is a problem that has already been solved by both eliminating the seller funded DPA and requiring a minimum standard of creditworthiness.
Given the changes, I expect the FHA to return to historical norms for it’s performance (especially considering that the requirements in place now are tougher requirements than have been historically needed on it).
