The FHA has tightened lending standards, all in an effort to remain solvent.

Higher monthly fees. Earlier this month, Congress gave the green light for the FHA to raise the monthly premium it charges on loans; a presidential signature is expected.

FHA-backed loans have looser restrictions than other mortgages on down payments -- now at 3.5% of the home's selling price -- but require borrowers to pay an upfront fee and a monthly fee. The legislation allows the FHA to hike the monthly fee to as much as an annualized 1.5% of the loan balance, up from 0.55%, though initially it will go only to 0.9%.

The initial fee was increased earlier this year to 2.25% from 1.75%, though the FHA has said it will bring it down to 1% with the higher monthly fee.

A fee that doesn't go into paying off the loan? That would surely help. (sic)

Credit scores are now raised to 580 minimum for a 3.5% down payment.

Sellers can only contribute 3% instead of the 6% for borrower costs to sell the house. That puts the borrowers costs to 6.5% of the purchase price on a new home.

The FHA is also tightening underwriting standards.

The changes are a result of legislation passed earlier this month.

So much for the ownership society, but that was a fiction anyway, it was the debt with reduced income society in reality.

If one looks over the recent SIGTARP report, the U.S. government is now propping up and owns the entire residential real estate market.

Today we have another damning statistic via this Washington Post article, Rising FHA default rate foreshadows a crush of foreclosures.

9.1% of FHA loans missed 3 mortgage payments by December 2009.

Seems the problem is loans made in 2007, 2008. But by this time, the U.S. was well into a housing collapse, so the subprime lending was curtailed...but guess what, we have another sucker, the FHA.

The House was drawing up new banking regulation this week, which included the new agency to protect consumers from abusive and deceptive lenders. So would Congress stand up for the voters or the industry?

Bowing to political pressure from community bankers, the House Financial Services Committee approved an exemption on Thursday for more than 98 percent of the nation’s banks from oversight by a new agency created to protect consumers from abusive or deceptive credit cards, mortgages and other loans.
The carve-out in legislation overhauling the regulatory system would prevent the new consumer financial protection agency from conducting annual examinations of the lending practices at more than 8,000 of the nation’s 8,200 banks, leaving only the largest banks and other lenders subject to the agency’s examiners.

There has been a series of Congressional hearings and there are two which point to some serious trouble at our never ending financial black holes, Freddie Mac, Fannie Mae and the FHA.

Firstly, Fannie & Freddie might require even more money, even though they have received $96 Billion in bail out cash. Total losses to date from these two is $196 billion.

Their books are still bleeding red as foreclosures rise and homeowners — even the highest-quality borrowers — fall behind on their mortgage payments. Several crucial positions remain vacant, and Mr. DeMarco said the agencies are worried about losing workers because of the uncertainties surrounding their fate.