The FHA, guarantor to just about every mortgage being written these days, is busted. You and I might think we had a problem were we in the same situation but this is Chinatown, Jake, so no worries.
Critics say the agency insured too many loans to unqualified borrowers in 2007 and 2008, a position the agency itself now agrees with. Nearly one in five loans it insured in 2007 now fall into the category of “seriously delinquent,” it revealed Tuesday.
The F.H.A. says that it is now insuring loans to more financially secure buyers with highercredit scores. In a sense, the agency is bulking up and giving as many loans as it can to diminish the pool of problem loans. It guaranteed more than $360 billion in mortgages in the last year, four times the amount in 2007.
Critics say this is only increasing the size of the ultimate peril.
“They keep saying they’re going to outrun their problems, but some way, somehow, the taxpayer is going to end up on the hook,” said Edward Pinto, a former executive with the government mortgage giant Fannie Mae.