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.
Bad debt at the Federal Housing Administration could send the nation’s already wobbly economy into yet another tailspin, U.S. Rep. Stephen Lynch told the Herald in an interview late last week.
“Problems at the FHA could upset the little recovery that we now have,” said Lynch, who is drafting legislation that would require the sprawling government agency to provide Congress with a financial status report twice a year.
“Right now, we can’t tell where they are at,” he said.
Currently, the FHA, which guarantees payments of millions of home loans, reports its financial status to Congress once a year in the fall.
Due to recent upheaval in the mortgage market, the FHA’s share of home loans has ballooned to about 30 percent.
