The number of riskier mortgages is growing, which is increasing delinquencies—albeit slightly—and raising concerns about defaults, USA Today reports. Federal Housing Administration loans, which typically require down payments of 3 percent to 5 percent, are at the center of most of the concern.
FHA-backed loans are becoming more available through non-banker lenders, who have in some cases eased credit standards compared to banks.
The big concern to many economists is if home prices peak and then decrease, homeowners who made a down payment of just 5 percent and are less creditworthy may be more likely to default.
But non-bank lenders say the loosening of FHA standards is a welcome sign and not one to fear. Your comments?
Source: “Concerns About Riskier Mortgages Are Sprouting,” USA Today (March 12, 2017)