FHA aid to high-priced homes should drop

Insurance should benefit first-timers, lower-income buyers, George Washington University report says

“The widely used FHA mortgage insurance program should return to its roots of helping primarily first-time and lower-income buyers, say two economists from the George Washington University business school.

“FHA is serving a market — higher-income borrowers — that it has not traditionally served,” say Robert Van Order and Anthony Yezer. “To the extent there is a subsidy involved in FHA insurance, it is not clear that taxpayer dollars should be used to serve these borrowers. There is no obvious purpose achieved by encouraging purchases of homes with $700,000 mortgages and less than 5 percent down payments.”

FHA — the Federal Housing Administration — has increased its mortgage insurance coverage since the housing bubble burst in 2007 and subprime loans evaporated…”

Read more of Union Tribune’s article here: “FHA aid to high-priced homes should drop”.