Federal Housing Administration Struggles as Defaults Rise

Wednesday, February 03, 2010

The bathtub survived the blast, though it lost two of its legs. (Ida Lieszkovszky)

The Federal Housing Administration used to be a little-known government agency before the housing meltdown. But when Fannie Mae and Freddie Mac collapsed, the FHA started backing more and more loans to homeowners. Now, a growing number of borrowers are defaulting on loans backed by the FHA — and some are wondering if the FHA itself might soon need a bailout.

We find out how the agency is trying to weather the storm created by increased lending. We also get a first-hand look at how the housing crisis is affecting Cleveland, Ohio.

 

Brett Barry, a broker with Homesmart in Phoenix, Ariz., is a fierce critic of the FHA's low down-payment rates. But the FHA's commissioner, David Stevens, told us that the FHA has sufficient reserves to deal with the increased lending. Ida Lieszkovsky reports from WCPN in Cleveland, where a home abandoned to foreclosure recently exploded, making six other families homeless.

See images of the foreclosed house that exploded in Cleveland thanks to Ida Lieszkovsky:

Ida Lieszkovszky
After an abandoned and foreclosed home blew up, only rubble remained.
Ida Lieszkovszky
The bathtub survived the blast, though it lost two of its legs.

Guests:

Ida Lieszkovsky and Brett Barry

Produced by:

Noel King

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