Washington Post reporters studied federal data and discovered that FHA home mortgage loans defaults are increasing rapidly. The home loan default research shows that the number of borrowers who failed to make more than one payment before defaulting nearby tripled over the past year.
According to the article by Dina ElBoghdady and Dan Keating, “Many mortgage industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers, and most notably, foul play among unscrupulous lenders looking to make a quick buck.”
If someone defaults on their home loan because they have suddenly lost their job or face a health crisis, that’s understandable these days. But, after everything our country has faced since the subprime mortgage lending debacle began a few years ago, it is criminal to think that lenders are once again committing fraud and failing to do the work to make sure the people they are lending to can actual repay their loans. Do we have to learn this lesson again?
Even scarier is the fact these mortgages are government-backed. So, guess who pays when these borrowers default? Not the FHA lenders who wrote the paper for the bad mortgages. The FHA has make good on those home mortgages from government reserves. If the FHA reserves run out, Congress will be expected to bail out the FHA, with more taxpayer dollars.
