FHA stands for Federal Housing Administration and is part of the U.S. Department of Housing and Urban Development. FHA loans came into existence in the 1930’s during the Great Depression in order to allow lower income Americans to borrow money for the purchase of a home. The government program was intended to provide banks with adequate insurance to insure against mortgage defaults that were subsidized by the government.
It is only fitting that as we enter an era that is similar to that of the Great Depression that FHA will become a huge player as a home loan provider in the years to come. While there is no actual evidence of this, the current loan trends would indicate that FHA will be the primary go to lender for new home buyers. However, FHA is expected to take a major hit with the foreclosure crisis in the coming months, causing further pain to the mortgage market.
FHA loans were originally created to help low income families purchase properties. Being pre-approved for FHA loans is a great way to get qualified and acquire the loan. Many people are wondering if FHA will be the main home loan player when the mortgage market turns around and I believe that they will simply dominate the market in future.
FHA is usually the last player standing, providing housing loans to people who are less financially fortunate than others through thick and thin. Today is no different. It used to be that the FHA only catered to low income families, now they have changed things. They have begun to offer home loans across the income spectrum and provide loan assistance to nearly everyone with a decent credit score.
With hundreds of lenders now gone bust, FHA is now growing in size to include lenders that otherwise would have nothing to do with these types of loans. Bank of America and Wells Fargo have the larget chunk of these mortgages with over half of the FHA loans granted to families through BofA and Wells.
The Federal Housing Administration is efficient at what they do. They have been in business for years providing low income families with what they need to make ends meet. Now, they have graduated to include higher loan amounts in their mortgage provisions.
What’s the future for the FHA?
Well, considering their track record of outstanding performance, they will probably rise to the top in any situation they are presented with. Minus any mitigating circumstances, they will persevere through whatever it takes to remain a stronghold for low income (and high credit score) loan seekers. Only time will tell what to expect in the future, but the FHA has been a vigilante source of outstanding work ethic and attainable, simplistic goals. This truth has served them for as long as they’ve been in business.