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2 Housing Fin. Rev. 93 (1983)
FHA Mortgage Insurance and High-Risk Mortgage Lending: Some Lessons for Policy

handle is hein.journals/hsnfnrv2 and id is 95 raw text is: FHA Mortgage Insurance and High-Risk Mortgage Lending: Some Lessons for Policy by James R. Barth, Joseph J. Cordes, and Anthony M. J. Yezer* While FHA mortgage insurance may have been initiated to promote the revival of the housing industry in the 1930s, historical analysis of the program indicates that it had an important demonstration effect. Foreclosure experience on high loan-to-value mortgages insured by FHA provided information on the implications of innovative mort- gage terms. Detailed statistical analysis of foreclosure experience under the FHA programs could have produced more information. This paper performs such analysis and shows that the FHA portfolio continues to provide experimental evidence on the effects of loan terms, borrower characteristics, and property attributes on expected losses. I. Introduction Since the 1930s the federal government has played an increasingly important role in the allocation of mortgage credit. A primary goal of federal housing policy has been the expansion of mortgage credit availability to borrowers seeking longer terms, lower down payments, * Barth: The George Washington University and a Visiting Scholar at the Federal Reserve Bank of Atlanta; Cordes and Yezer: The George Washington University. The research for this paper was sponsored by a grant from the National Science Foundation and by the Congressional Budget Office, U.S. Congress. The authors are grateful to A. Thomas King and to two anonymous referees for helpful comments on previous drafts. The views expressed in this paper are those of the authors and are not intended to reflect the views or policy of the Federal Home Loan Bank Board. © 1983 by James R. Barth, Joseph J. Cordes, and Anthony M. J. Yezer.

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