AC

Almost a year after the federal government launched its rescue of the housing market, nearly one in four new mortgages is insured by the Federal Housing Administration. With less than a month to go in the 2009 fiscal year, the FHA is on pace for its busiest year. From Oct. 1 through mid-August, applications for FHA single-family-home mortgages were up 50%, to 2.52 million, from the same period a year earlier. Approvals for purchases, refinancings and reverse mortgages rose 70% to 1.67 million. Eighty percent of the FHA mortgages for purchasing homes went to first-time buyers drawn to the FHA's low-down payment requirements, starting at 3.5%. Private lenders making conventional loans typically require at least 10% down. The FHA's market share, about 3% in 2006, has swollen to more than 23%. With credit still tight, many borrowers could not get a mortgage without FHA help. FHA loans "are one of the most important sources in this market," says Mark Zandi of Moody's Economy.com....