The Federal Housing Administration initiated on Tuesday a probe of 15 mortgage companies that have disproportionately high default rates on loans insured by the government agency.
Officials served subpoenas on the companies on Tuesday. The agency is looking at mortgage companies that have had above-average rates of loans that default shortly after origination, which is often a sign of fraud or sloppy underwriting.
The FHA, which doesn’t make loans but instead insures lenders against losses, has boosted its market share rapidly in the aftermath of the housing bust, and it now accounts for around one-quarter of the U.S. mortgage market. The agency is under pressure to stem losses from rising defaults and its capital reserves are expected to be heavily depleted as a result of those defaulted loans.
Read more here.
Posts
No comments:
Post a Comment