This will end in a disastrous taxpayer bailout.

Dr. Housing Bubble-

FHA insured loans stepped in to take up a lot of the slack when other low down payment loans exited the market in 2007.  FHA insured loans are still a low down payment option requiring only 3.5 percent down but at least with these loans, some level of due diligence is done when looking at potential borrowers.  Yet over the last few years, FHA insured loans have gone from a tiny piece of the housing market to now being up over $1.1 trillion in loan guarantees outstanding.  The housing market is now becoming largely bimodal with all cash buyers picking up better properties while those with barely any down payment funds opt to go the FHA route.  Given how expensive FHA loans have become, it is apparent that a large portion of the population doesn’t even have enough to enter the housing market without 30x leverage.  Changes are also coming to FHA insured loans that will make them more expensive in a few months.  Why are these loans getting more expensive when the housing market is supposedly robust?

[DR HOUSING BUBBLE]

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