Looming Deficit Impedes Federal Housing Agency

New York Times (04/09/08) P. C1; Swarns, Rachel L.
The Federal Housing Administration is facing some financial problems at a time when lawmakers want to rely more on the agency to help keep hundreds of thousands of homeowners from going into foreclosure. The FHA could experience a deficit starting in the fiscal year that begins in October, which would be the first in the 74-year history of the agency; and housing officials blame its financial woes largely on the surging rate of delinquencies and foreclosures involving borrowers who used seller-financed down payment loans. They hope to address the FHA's financial issues by pushing for legislation that would prohibit seller down payment loans and charging homeowners higher premiums, which would increase the cost of the loans it insures. More than 150,000 homeowners have refinanced into government-backed mortgages since last September, and housing officials believe the number will rise to 400,000 by the end of the year.