In San Diego, one major mortgage lender's new FHA loan originations went from approximately 2% to approximately 60% of new loans! The low down payment (apprx. 3%) and relative availability of FHA home loans are helping to drive hoards of borrowers to the FHA. Many new homeowners with the most risk and fewest dollars are going to the FHA for loans. In 2007, they handled 3% of new loans. This year it's 26%.
However, these additional higher-risk loans are stressing the FHA insurance system. So, now the FHA's own somewhat lax standards are coming back to create a huge hit to their loan insurance fund. It has dropped the FHA insurance fund 39% since last year, raising concerns for the FHA requiring its own bailout. La Jolla bank owned real estate
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