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• Rich - Nov 12 2009 | the, housing, seattle, mortgage, seattle real estate, real estate

  The FHA helps homebuyers who often cannot qualify for a loan otherwise. The problem is that there is usually a very good reason for why a potential buyer doesn't qualify for a conventional loan - poor/limited credit history is one, lack of funds is another. The result is that the FHA lends money to a pool of higher-risk borrowers (that is, a higher chance of default). It's no surprise, then, that as of this past summer, about 17% of FHA borrowers were behind on at least 1 payment.

  I don't see anyway around a bailout of the FHA by taxpayers within the next few years.

  Quoted: The Federal Housing Administration says its financial cushion has dipped to a dangerously low level but should remain above zero under "most economic scenarios." The agency, a major source of funds for first-time homebuyers, faces mounting concerns that it will eventually need a taxpayer bailout as losses grow from homeowners who lose their jobs and can't pay their mortgages.

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