Critics of government policy in the housing markets have expressed concern that there will be a need to bail out the FHA someday because of the increase of exposure the agency has experienced recently, as well as increases in late mortgages over 90 days in arrears. These late loans have spiked by 62% according to recent reports. This represents about 9.4% of the entire FHA loan portfolio.
David Stevens, the current FHA commissioner, is quick to point out that the FHA is in better shape than many might think. The FHA loan portfolio has recently performed better than most mortgage products. One of the reasons for the spike in 90 day + late loans is given in explanation. Many lenders and banks are reluctant to take on any more bad loans, with the required write-offs when they're called in. They would rather wait a while longer, hoping that owners will make some effort at repayment that will stave off foreclosure. This increases the aging, but doesn't look as bad on the books.
And, while the FHA has taken on a much larger role in home mortgages lately, as much as a third of all loans, their newer loans are said to be doing better. This is attributed in part to the tighter lending rules and higher credit score requirements. While it's more difficult to get an FHA mortgage now, the hope is that the new borrower is in a better situation to continue to repay their loan. If this holds true, the FHA could be stronger in the future, giving private lending a powerful competitor with lower down payment requirements.