Defaults On Government-Backed Mortgages Rising
STEVE INSKEEP, host:
Federal housing authorities have cracked down on a home lender responsible for more than 1,000 loans gone bad. The Federal Housing Administration, or FHA, insures home loans but has seen defaults go up.
NPR's Tamara Keith has more on yesterday's move.
TAMARA KEITH: In recent months, Lend America has aggressively gone after customers with ads like this one.
(Soundbite of ad)
Unidentified Woman: Call Lend America right now. Hundreds of mortgage specialists are standing by.
KEITH: But the company's FHA loans defaulted at more than double the national average. This week the FHA pulled Lend America's approval to make government backed loans, essentially shutting the company down.
Mr. DAVID STEVENS (Federal Housing Administration): Making sure that this company cannot continue to behave the way it does and prey on consumers in the way they have.
KEITH: That tough talk comes from FHA commissioner David Stevens. In a statement, Lend America said it is surprised and disappointed by the action and is reviewing its options. Stevens says the FHA plans to continue going after problem lenders.
Mr. STEVENS: We are looking at other institutions right now that we think are performing in a way that shouldn't be acceptable to anybody who looks at the mortgage business or looks at FHA.
KEITH: Republican Congressman Scott Garrett says the FHA needs to tighten its lending standards, and closing down problem lenders isn't enough.
Representative SCOTT GARRETT (Republican, New Jersey): It should be done. It should have been done before, but it's just probably not going to be the factor that makes sure that their book(ph) one that is sustainable.
KEITH: Garrett has introduced a bill to require larger down payments on FHA loans. The agency currently requires only 3.5 percent down and has resisted changing that.
Tamara Keith, NPR News, Washington.
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