After 10 years of near-dormancy, the Federal Housing Administration - unable to compete in an era dominated by the subprime loan market - has lately been making a comeback as an insurer of home loans in Baltimore. Unfortunately, today's FHA-approved mortgage brokers are frequently yesterday's subprime brokers. Fraud has tainted the FHA loan process - and strong steps must be taken in response.
Available financing is essential to ending the housing crisis and enabling qualified buyers to purchase or refinance responsibly. The need is great; foreclosure filings in Baltimore are once again hovering around historic late-1990s numbers, and at various levels of government, industry and advocacy, there is talk about principal write-downs, government refinancing programs and a moratorium on foreclosures (though the latter is regrettably absent from the Obama administration's foreclosure prevention proposals).
The FHA is currently one of few options available to buy or refinance a home for those with sufficient income but lower credit scores and minimal down-payment resources. Last March, one of Baltimore's experts in the housing field, Vincent P. Quayle, on this page expressed hope that "the FHA and the lending community will have learned from the past and will support once again a system based on trust and fairness." This past week, The Washington Post reported a national increase in FHA loan defaults - especially alarming because borrowers are defaulting on their first or second loan payments.
