Where have we seen this before? A major backer of home mortgages may need a bailout. Oh yeah, that was right here. Wasn’t it only a year ago that Fannie Mae and Freddie Mac needed a bailout to save them from themselves? They had so many bad loans on the books because of lax rules and loose oversight.
Now it seems that the Federal Housing Administration (FHA) is in trouble. According to an article in the New York Times (article) 20% of loans insured last year and another 24% of those from 2007, are in serious trouble.
Didn’t They Learn?
Banks all across the country have tightened lending standards requiring that the borrowers actually have the ability to repay. Imagine that! It seems that just throwing money at anyone who can fog a mirror is not good business. While people complain about how tough it is to get a loan now, they are better off in the long term.