As fallout from the housing crisis continues, the Federal Housing Administration recently reported a record backlog of nearly 176,000 homes in foreclosure.
That’s 27% more than the agency had at the end of 2009, and represents 8.78% of all the mortgages the FHA holds.
[Related Story: Regional Banks Still Stuck with Foreclosures]
The growing number of houses in foreclosure could become a problem for the agency, which in recent years has become the dominant mortgage lender in the country. In 2010, FHA loans were used in 30% of all home purchases, up from 5.6% in 2005. That’s largely because the mortgage crisis drove most private lenders from the market. FHA loans typically go to people who cannot qualify for mortgages elsewhere.
News of the FHA’s growing foreclosure problem follows an announcement by the agency last month that it will increase the rates it charges for loan insurance because its capital reserves had fallen below levels required by Congress. The increase would cost a homeowner with a $157,000 mortgage an extra $396 a year.