“The market share of mortgages insured by FHA/VA (Federal Housing Administration/Veterans Administration) has risen much more dramatically, from 3 percent in 2006 to 20 percent for 2008, but even more startling, to 35 percent in the fourth quarter of 2008.”

We see this in the Phoenix real estate market. FHA loans are a high percentage of loans given the lower down payment requirement and competitiveness with conventional loans.

As long as FHA is employing risk assessments and practicing solid lending oversight (such as the SWAT you mention in your other post), there shouldn’t be much an issue here.

Of course there will be defaults. However, the bigger impact as you call out would be what would happen if FHA suddenly tightened up and many home buyers could not even take advantage of FHA?

Great post and insights.

David Lorti