As FHA's role grows, so does the risk of fraud...

[Chad Fabry]

By BARRY MEIER

The New York Times

Sunday, December 14, 2008

During the subprime boom, the Federal Housing Administration, created in 1934 to help lower-income and first-time buyers purchase homes, all but sat out the party.

Borrowers abandoned the FHA in favor of conventional loans that were both easier to qualify for and less expensive. The agency does not itself issue mortgages but it insures lenders that do, and its insurance pool is financed by premiums paid by homeowners who use its programs. Now, as credit tightens...