Monday, November 7, 2011

Congress faults FHA on risk control

Is congress expecting more financial problems at FHA?
FHA's role in the mortgage market has grown since the housing bubble burst in 2007 and private financing options for homebuyers grew scarce. The housing agency provides private lenders with a guarantee against defaults on certain mortgages. About a third of all new loans for home purchases are guaranteed by FHA.
"The recent increased reliance on FHA mortgage insurance highlights the need for FHA to better ensure that it has the proper controls in place to minimize financial risks," the report stated
Left unaddressed, there is an increased possibility that FHA "will require additional funds to help cover its costs on insurance issued to date" if the performance on FHA-backed loans weakens, the GAO found.
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