I am from the government and am here to help.

Words that should make any American shudder. And the housing market may be wondering why we got sucked into another black hole of foreclosures and bankruptcies after the massive infusion of FHA loans into the economy.

1 in 8 Federal Housing Administration loans is delinquent. Yes, you heard it right. 1 in 8. That is a higher rate than any major loan portfolio that the same government is calling irresponsible by a factor of 3.

So when you read about how the government officials are berating banks as being selfish and writing bad loans, just smile on the inside. They are the worst offenders, the true wolf in sheep’s clothing, and they are using your money to lend to people who can not pay it back.

Last year banks issued $180 billion of new mortgages insured by the FHA, which means they carry a 100% taxpayer guarantee. Many of these have the same characteristics as subprime loans: low downpayment requirements, high-risk borrowers, and in many cases shady mortgage originators. FHA now insures nearly one of every three new mortgages, up from 2% in 2006.

The financial results so far are not as dire as those created by the subprime frenzy of 2004-2007, but taxpayer losses are mounting on its $562 billion portfolio. According to Mortgage Bankers Association data, more than one in eight FHA loans is now delinquent — nearly triple the rate on conventional, nonsubprime loan portfolios. Another 7.5% of recent FHA loans are in “serious delinquency,” which means at least three months overdue.- WSJ.com.

Related posts:

1. Bank of America To Modify 630,000 Loans in 2009 To Avoid Foreclosures
2. Why We Might See Another Housing Slowdown if FHA Loans Blow Up
3. Federal Reserve Initiates 9.9 Billion Dollar Loan Modification Plan
4. Now Developers Need A Bailout As Loans Come Due
5. Federal Bailout Money Going Straight To Bottom Line, Not To Loans