Rising FHA defaults, more Foreclosures Coming

The amount of the FHA insured loans that are behind in their payments jumped by 1/3 last year, foreshadowing a crush of foreclosures to trouble an agency responsible for a large segment of home loans today, as reported in the Washington Post.

The rise in delinquencies is growing at a rapid pace now, and the foreclosures are stemming from loans made in 2007 and 2008. This was reported in October by Commissioner David Stevens in his October Report, and the rest of the report wasn't good news either.

Current delinquency rates are at 9.1% up from 6.4% a year ago. This rate has been eating away at the cash in the agency and it seems to be speeding up in the last 2 quarters. Most of the problem loans date back to 2007 and 2008, however more newer loans are in jeopardy as well, mainly due to the continued decline in housing values in some areas and the high unemployment.

It is feared that if these loses continue, the government will have to use Taxpayers Dollars to bail out the FHA, something that has never happened before. In the last quarter alone the agency reported a 26% increase in delinquent loans.

This is further exasperated by the fact that many FHA borrowers are the middle class working people most affected by the high unemployment, and certainly the most vunerable to fall behind in their payments.

Just another reason that the first bailout should never had occurred and now the Taxpayer is forced to pay out good money after bad. The government is now faced with bailing out their own agencies, a sorry first in America, and should this occur before November, look out!