Personally, I don’t think the FHA rules, which were just changed in terms of cost (see this article), are the problem. The program has been working for years, and the current problems we are experiencing are more a function of the easy credit of the past few years and poor underwriting decisions on that part of FHA approved lenders.

At the same time, changing the FHA rules will force a change in the way banks underwrite, knowing that if they don’t the banks might risk not being able to sell the loans they originate.