Thursday, April 2, 2009
The government says the number of troubled loans backed by the federal mortgage insurance program is on the rise as economic troubles mount.
However, Housing and Urban Development Secretary Shaun Donovan is telling Senate lawmakers Thursday that the Federal Housing Administration is "unlikely to face the catastrophic losses borne in the subprime sector." He says in prepared remarks that that is partly because it didn't back loans for more expensive properties that have plummeted in value.
As of February, 7.2% of loans backed by the FHA were either 90 days overdue or in foreclosure, up from 5.8% last August.
The FHA is the main source of home loans to borrowers with poor credit and low down payments after the subprime lending market's collapse.