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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