Thursday, November 12, 2009
FHA propping up housing market
As banks have clamped down on mortgage lending, the FHA program has emerged as one of the few ways people can buy a home. Banks are more willing to make FHA loans because they come with a federal guarantee to cover losses if the borrower defaults. And borrowers can more easily qualify for FHA loans because they only need 3.5% down and can have lower credit scores. As a result, demand for FHA loans has exploded. The agency guaranteed more than $360 billion in single-family mortgages in fiscal 2009, which ended Sept. 30, more than four times the volume in fiscal 2007.