Defaults, fraud drain FHA fund

A surge in demand for FHA-backed loans is likely to overtax the oversight resources of the Federal Housing Administration, making the program more vulnerable to fraud schemes, HUD's inspector general told lawmakers this week.

The growth in demand -- FHA backed $71.7 billion in single-family mortgages in the first three months of the year, up 245 percent from a year ago -- comes as delinquencies and foreclosures hit new highs, threatening to deplete the FHA's insurance fund below statutory minimums for the first time since 1934.

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