FHA home loan programs continue to soar in popularity. HUD reported that the FHA loans during the first part of August were receiving about 10,000 applications per day. “The Federal Housing Administration,” says the Wall Street Journal, “hit by increasing mortgage losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout.”

According to MarketWatch, “Once the home financing market started to collapse,” says, “the government decided the FHA should try to prop up the market.” The FHA loosened their credit guidelines some but not as far as the subprime lenders had in previous years. FHA guaranteed loans with a down payment as small as 3.5% and grant homeowners more access to take out cash refinance loan. In the last five years, Congress doubled the maximum FHA loan to $729,750.” FHA mortgage rates continue to reports fixed 30-year rates around 5.25%.

FHA increased its down-payment requirement to 3.5 % from 3 % last year? FHA also campaigned hard for Congress to drop down-payment assistance plans to mitigate insurance risks and reduce claims. Many mortgage brokers want FHA to expand their credit criteria and FHA guidelines even more. Is that realistic with the current climate of delinquencies, loan defaults and home foreclosures?