But the New Deal-era agency has seen its market share swell, to around one-quarter of the mortgage market today, up from 2% in 2006, according to Inside Mortgage Finance.
During the second quarter, the FHA backed nearly half of all mortgages made to first-time home buyers, and today it accounts for around half of all new home loans in some of the nation's hardest-hit housing markets.
The agency expects defaults on 20% of those backed in 2008, when it should have known better. Considering they are politically afraid of foreclosure, they seem intent on learning the hard way that a pushover lender can lose a lot of money when the word gets out. But, heh, it's not their money, it comes from Obama's magic stash!
From the WSJ, we see that Rep. Scott Garrett (R., N.J.) introduced a bill last month that would raise minimum down payments to 5%, up from the current 3.5% minimum. He might also address the fact that the $8k tax credit can be transmogrified into the down payment, making no-money down quite common for first time homebuyers, but already he has substantial opposition.