"A Bush administration official on Monday warned against overly broad government intervention to stem the housing crisis, arguing that lawmakers' proposed foreclosure prevention program would saddle taxpayers with too much risk.From the NYT:
The Federal Housing Administration, which guarantees loans made to borrowers with poor credit, could be weakened by a plan for the agency to back as much as $300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages, said commissioner Brian Montgomery.
'We are not designed to become the federal lender of last resort, a mega-agency to subsidize bad loans,' Montgomery said in a speech at the National Press Club".
"WASHINGTON — The Federal Housing Administration expects to lose $4.6 billion because of unexpectedly high default rates on home loans, officials said Monday.
. . .
The projected loss is the highest in the home loan program since 2004, and officials said the F.H.A. had to withdraw $4.6 billion from its $21 billion capital reserve fund in May to cover the costs. They said the agency, which is self-sustaining, would not need appropriations from Congress to remain solvent.
But Mr. Montgomery warned that the F.H.A. would have to renew its efforts to end the seller-financed down payment program, which accounted for 35 percent of its loans in 2007.
He said the mortgages had foreclosure rates three times those of traditional loans and would push the F.H.A. to the brink of insolvency".