FHA Loans Emerge From the Sidelines

Washington Post (06/10/08) P. D1; ElBoghdady, Dina
FHA loans fell out of favor when subprime loans with low upfront costs became widely available during the housing boom, but they are regaining popularity as lenders impose stricter underwriting standards because of steep defaults and borrowers are left with few options to refinance out of adjustable-rate loans. Borrowers find them attractive because they require only a 3-percent down payment; and the maximum loan amount was temporarily hiked in high-cost markets, spurring a 126-percent swell in FHA loans in the first quarter from the same period last year. In Maryland and Virginia, 15,000 FHA mortgages were issued in the first quarter, with refinancings accounting for close to 60 percent of the loans. Local real estate brokerages are responding by training their agents and in-house loan officers on how to handle FHA loans.