Amy Hoak over at MarketWatch recently wrote this interesting review of the current state of sub-prime loans and how goverment-backed programs like FHA fit in:
BOSTON (MarketWatch) — Although “subprime” has become a four-letter word in the country’s collective lexicon and no one is sure when the credit crisis that was spawned by a meltdown in the risky lending sector will ease, mortgage bankers say you can count on this: Subprime shall return.
The next generation of subprime mortgages, however, will look much different than the loans issued during the height of the housing boom in the first half of the decade that are now causing so much trouble, mortgage professionals say.
“So long as we have a policy position in this country of maintaining or further increasing homeownership rates there is going to be subprime lending,” said Mark Fleming, chief economist with First American CoreLogic, a provider of mortgage-risk management and fraud-protection technology.