The Next Hit: New Wave Of Federally-Backed Mortgages Go Bad Without A Single Payment

[marmar]

from the WaPo:



The Next Hit: Quick Defaults
More FHA-Backed Mortgages Go Bad Without a Single Payment

By Dina ElBoghdady and Dan Keating
Washington Post Staff Writers

Sunday, March 8, 2009; Page A01


The last time the housing market was this bad, Congress set up the Federal Housing Administration to insure Depression-era mortgages that lenders wouldn't otherwise make.

This decade's housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the subprime mortgage market has crashed and borrowers are flocking back to the FHA, which has become the only option for those who lack hefty down payments or stellar credit. The agency's historic role in backing mortgages is more crucial now than at any time since its founding.

With the surge in new loans, however, comes a new threat. Many borrowers are defaulting as quickly as they take out the loans. In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency's overall growth in new loans, according to a Washington Post analysis of federal data.

Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers and most notably, foul play among unscrupulous lenders looking to make a quick buck.

If a loan "is going into default immediately, it clearly suggests impropriety and fraudulent activity," said Kenneth Donohue, the inspector general of the Department of Housing and Urban Development, which includes the FHA. ........(more)

The complete piece is at: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/07/AR2009030702257.html?hpid=topnews

[burythehatchet]

1. the bezzle?

[yourout]

2. The lender should have to forfeit what they get if the loan defaults in the first year.

[jpak]

3. Obama's next infrastructure project: The Big House for Mortgage Crooks

Where the crooks pay for their own room and board...and break rocks all day...in the hot sun...