FHA will always have a higher default rate because most of their loans are geared for first time home buyers with lower down payments.  FHA also had many guidelines that were much less stringent than Conventional loans.  Now they are about the same.

Also, the Community Reinvestment Act forced FHA to lend to folks with extremely limited credit.  Conventional loans were also affected, but I don't think as severe as FHA was.  FHA loans are insured by the Fed Housing Admin.  Low down payment Conventional loans are insured by mortgage insurance companies that make their own rules (used to) regardless of what the gvmt wanted.

The Conventional loan product will historically have a lower default rate because the majority of Conv. loans go to experienced home buyers.  I rarely do an FHA loan for someone selling their current home and moving to another.

I believe in the coming years you will see a much lower default rate for FHA loans because the guidelines are becoming more conservative.

FHA also monitors the default rate for each lender that originates an FHA loan.  They actually have maps to review the default rates in any given neighborhood.

These are just my opinions, I did not spend an hour researching my answer to this question, so all you mortgage folks out there, please contribute in a polite manner.