[quote=livinincali]Here’s a good blog post that shows the progression of FHA defaults. It’s been steadily rising ever quarter and Q2 2012 should be out soon.
I could have predicted this years ago. The FHA loan ceiling is much too high almost everywhere in the US. The FHA 203(b) program was initially put into place to assist first time moderate income buyers in getting a “leg up” into homeownership. It was NEVER intended to enable buyers to purchase luxury housing and/or housing in highly desirable areas for only 3.5% down.
Even with the several increases in up-front and monthly MIP premiums in recent years, this extra MIP will prove to NOT be enough to insure the inevitable tide of defaults (by borrowers who never should have been approved for those mortgages) and subsequent foreclosures, IMO.
The FHA mortgage “ceiling” in SD County should have always been =<$300K. It's not supposed to be a "major player" here and never was. This is a MORE THAN ADEQUATE mortgage for the purpose the program was intended for.
