Will FHA Be The Next Fannie Mae?
Quite possibly. It is scary because Ginnie Mae which backs FHA loans is growing very fast and almost at a trillion dollars. We own Ginnie Mae just like we do Fannie Mae. Their default rate keeps increasing too.
“Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.”