Because they insured the banks against loss if the loans went bad, they had to pay off a lot of money. Like any insurance company, if you have to pay out more than you collected in insurance premiums, you are in trouble.
That is what is happening to FHA. Since 2007, they have been the main supplier of loans, The next step is tapping into United States Treasury funds. Ouch!!! Be prepared for higher FHA loan costs- Another stumbling block to homeowners who are already spending their last dime for the American dream. In addition, the policy of allowing homeowners to stop paying MIP (Mortgage insurance premiums) when the property value increased is going bye-bye. You will pay FOREVER!!. They also say they are going to streamline the short sale process. I will believe that when i see it.
FHA is also getting flack for the new programs of lending to people to already defaulted 3 years before.
FHA insures more than one trillion dollars of loans. It may be broke but it should be fixed. FHA has been the lifeline for millions of people and it worked well for many years. Before 1986, you did not even have to qualify at all, and it still worked. So what went wrong? … Your Comment …