A Built-In Bailout For FHA

November 19, 2009

One troubled underwriter hit hard by the subprime mortgage crisis won’t be asking for a government bailout, because it is part of the government. The Federal Housing Administration (FHA), created in 1934, insures mortgages, protecting lenders from defaults. Homeowners who receive FHA-backed mortgages pay insurance premiums in addition to their monthly mortgage payments, allowing the FHA to cover the cost to lenders when homeowners are unable to meet their obligations. …

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