Gov't-backed home loans triple

Government-backed loans triple as private mortgage funding wanes

NEW YORK (Associated Press) - The share of home loan applications
backed by the government more than tripled last month from a year
earlier as funding for home loans dried up from private lenders, an
industry group said Monday.

The data released by the Mortgage
Bankers Association highlights the growing popularity of mortgage
insured by the Federal Housing Administration, a Depression-era
government agency that backs loans made to borrowers with poor credit.

Government-insured
loans, primarily backed by the FHA, made up more than 29 percent of all
loan applications last month, compared with 8.4 percent a year earlier,
the bankers group said.

The government's share of the market has rebounded from a low of 5.8 percent three years ago.

While
FHA loans are insured by the government in the event of default, the
mortgages themselves are made by major lenders such as Bank of America
Corp. and Wells Fargo & Co., and are typically offered to investors
as mortgage-backed securities by federal housing finance agency Ginnie
Mae.

FHA loans have traditionally required a 3 percent down
payment. The housing bill signed by President Bush last month raises
that requirement to 3.5 percent.

Source: Money Cnn