Government Backed Loans Surge

When borrowers talked about getting a mortgage you typically heard discussions of Countrywide and IndyMac--now you hear FHA. Only a few months ago you would have been hard pressed to find a lender, much less a borrower, that knew this acronym. Borrowers now ask for FHA loans, by name. Meanwhile, mortgage brokers are rushing to become approved FHA lenders.

FHA Gaining Market Share

Conceived in hard times, the Federal Housing Administration, is an agency built during another crippled mortgage market--the Great Depression. Since that time it had slowly lost its appeal and became known as an infamously cumbersome loan reserved for first-time home buyers with immature credit and small down payments.

However, according to recent reports by the Mortgage Bankers Association the FHA loan, and other similar government-backed loans are roaring back. Making up more than 29 percent of last month's mortgage applications, these types of government loans tripled.

Government Insures Mortgage Risk

In an effort to keep more homeowners in their homes and out of foreclosure the government has substantially increased their role as a default insurer. FHA, and other government-backed loans, are still made by traditional lenders like JP Morgan Chase, Bank of America, and Wells Fargo; however, they are insured against default by the US government.

Government Loans and Foreclosure Prevention

The recent signing of the US Housing and Economic Recovery Act made permanent many of the characteristics that make these loans popular: increased loan limits, no minimum credit score, low down payments, and liberal treatment of bankruptcy and foreclosure.

These attributes are certain to continue the surging popularity of these loans, both for lenders and borrowers.

Am I Eligible for a Government Backed Loan?

With so many programs and expanded guidelines, the answer is likely--"Yes."

The question becomes,  "What program is best suited for your individual financial needs?" This is the goal of the MortgageLoan.com's Government Backed Loan Resource Center, where you can get more detailed information about a variety of programs.

You may be surprised by the variety of incentives and special opportunities potentially fitting your situation. The government has focused programs on Teachers, Veterans, Seniors, Energy Efficient Homes, Community Revitalization, and many more.

Write Bill Rice at bill.rice@mortgageloan.com