FHA Loan Defaults Increase Again
This is cause for concern seeing as I have talked about this before and how I feel they are still loaning money to those who shouldn’t buy. They need to pay a little less attention to credit score and more attention to reserves and debt to income ratios.
Remember in the article I posted today that 9 out of 10 mortgages are backed by Fannie, Freddie, and the government. I hope I am wrong on this topic too.
“Loan defaults crossed the 9% mark in December, ending the year at 9.12%, up from 6.82% one year earlier and 8.94% at the end of November. Through 2009, the agency had insured 5.8 million loans worth $752.6 billion, or a 24% increase from one year ago.
FHA officials say that the loans that are being originated this year will help the agency turn a profit and offset the need for any taxpayer subsidy to offset rising losses. Officials point to sharply improved average credit scores on loans originated over the past year, which ended the year at 694, up from 661 one year earlier. But critics say that the assumptions used by the agency’s independent actuary are probably too optimistic, which could require Congress to make up a shortfall at some point down the road.”