The story, and others like it, “misrepresent a well-respected federal program that has provided untold benefits to millions of Americans,” said Phillip Murray, deputy assistant secretary of the Housing and Urban Development Department.  Murray criticized comparisons of FHA-insured mortgage practices to those seen in the subprime market. “FHA-insured mortgage loans are neither high-cost nor high-risk lending for homeowners,” he said.  But he added that he appreciated the chance provided by the controversy to ask Congress for more money to upgrade FHA’s computer systems. “FHA stats and loan data is actually stored on 35 separate legacy systems, which have been obsolete for nearly two decades,” he said.

FHA mortgage lending is a HUD unit that insures millions of mortgages, lowering costs for many homebuyers. Its volume of business fell sharply a few years ago as many lower income homeowners shifted to subprime mortgages. But FHA loan programs are popular again now that the subprime mortgage debacle has caused most of the home financing market to crash. Recent federal initiatives to stabilize the housing market rely heavily on the FHA, causing some lawmakers to question HUD has allowed the housing crisis to create a home loan burden on FHA. Read the complete article >