There was a good article in the San Diego Union Tribune recently on the resurgence of the FHA in the wake of the subprime mortgage meltdown. Here is an excerpt:
Lenders say the Federal Housing Administration is poised to resume its role as a major player in the U.S. mortgage market by coming to the aid of tens of thousands of distressed borrowers who could face foreclosure in the months ahead.
That’s because new lending limits approved by Congress will allow FHA-insured loans to be issued in high-cost markets such as San Diego at favorable terms, said Allen Jones, Bank of America’s government lending executive.
“From Bank of America’s perspective, we are very excited about the prospects of a renaissance for the FHA,” he said. “(The) FHA is a port in the storm for lenders, without a doubt.”
Recent, widespread loan failures have made credit so tight that many distressed borrowers are unable to refinance their loans. An estimated 1.8 million adjustable subprime mortgages are expected to reset at higher rates nationwide through 2009.
Jones said the FHA is coming to the rescue by bringing liquidity to lending institutions.
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