schreef:
Taken together, the two developments indicate “the limits of the government’s ability to make all the bad stuff go away,” said the investment strategist Ed Yardeni.
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During the housing boom, borrowers spurned the F.H.A. because it required them to fill out a few forms and come up with a down payment of 3 percent. The F.H.A. became a wallflower, its share of the market dwindling nearly to nothing.
Now the subprime lenders are gone, and traditional banks are so reluctant to issue mortgages they demand large down payments. But the F.H.A., which works with thousands of lenders to guarantee repayment of mortgages loans, only requires a down payment of 3.5 percent.
The agency’s share of the loan market has risen rapidly, to more than 20 percent. Some of those borrowers are losing their jobs and, as a result, their houses. The default rate on F.H.A. loans is rising.
About 14.4 percent of the agency’s loans in the second quarter were at least one payment past due but short of foreclosure. That is twice the delinquency rate for top-quality or prime loans, at 6.4 percent.
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The F.H.A. has become the government equivalent of Countrywide Financial, the hyper-aggressive private lender that crashed two years ago, Mr. Yardeni said. “If you lend money to people with a low probability of paying you back, you shouldn’t be surprised if they don’t,” he said.
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F.H.A. officials said Friday that rumors swirling around its reserve fund were untrue.
“There will be no taxpayer bailout, there will be no special appropriations, no legislation, no action requesting any additional funds whatsoever,” said David H. Stevens, the F.H.A.’s commissioner, in a conference call with reporters.
Nevertheless, the agency is appointing its first chief risk officer since it was founded during the Great Depression, and is making several policy changes. These include raising requirements on F.H.A. lenders to make sure they have sufficient financial backing, and providing new guidelines on the independence of appraisers, who analyze the value of a home before a sale closes.
At the F.D.I.C., the insurance fund fell to $10.4 billion at the end of the second quarter, the lowest level since the savings and loan crisis of the early 1990s.
More than 90 banks have failed this year. Another two joined the list Friday. The two banks are subsidiaries of Irwin Financial Corporation. The F.D.I.C. estimated that the failures would cost its deposit insurance fund $850 million.
Among the options for the F.D.I.C. to replenish its fund are levying a special fee on banks, tapping the Treasury or issuing its own debt, the F.D.I.C.’s chairwoman, Sheila C. Bair, said Friday. Banks are opposed to a fee, but Ms. Bair expressed little enthusiasm for borrowing from the Treasury.
“There is a philosophical question about the Treasury credit line, whether that is there for losses we know we will have or whether it’s there for unexpected emergencies,” Ms. Bair said.
Those losses are likely to keep rising into the indefinite future, said Lou Barnes, a Boulder, Colo., mortgage banker.
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“Government life support is crucial, but the patient has an open artery and each new transfusion of blood is just running out onto the floor,” Mr. Barnes said.