FHA Mortgage Foreclosures Rise

Foreclosures on home mortgages insured by the Federal Housing Administration are on the rise. Interestingly enough, it would appear that the Obama Hope for Homeowners has had little effect with regard to stemming the increasing tide of FHA delinquencies and subsequent foreclosures.

The Federal Housing Administration, commonly known as FHA, insures mortgage lenders against the risk of defaults on mortgages that meet its guidelines. FHA-backed loans are available Nationwide through most major lenders, and offer down payments as low as 3.5% of the purchase price of the home. As these loans are backed by the FHA and insured against default, it appears lenders have little motivation to modify these mortgages to payments that homeowners can afford.

According to Today’s Wall Street Journal, 7.5% of FHA loans were seriously delinquent at the end of February. Seriously delinquent mortgages are loans that are 90 days or more late, in foreclosure or in bankruptcy. As of January the U.S. Department of Housing and Urban Development (HUD), the government agency that FHA reports to, holds 39,687 foreclosed homes, up 22% from 2008.