Industry NewsMortgage

FHA insured $1.44B in loans to tax deadbeats

Homebuyers who owed IRS more likely to end up in default

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You might recall the scandalous findings by the Treasury Department's Inspector General that the Internal Revenue Service sent $7,500 and $8,000 first-time homebuyer tax credit checks to thousands of people who simply asked for them between 2008 and 2010, with no documentation showing they were eligible or had even purchased a house. Among the recipients: hundreds of prison inmates, kids as young as three, and dead people. Now investigators from Congress's watchdog agency, the Government Accountability Office, have turned up a new scandal, but this one involves thousands of people who improperly purchased homes using Federal Housing Administration (FHA) mortgage insurance and obtained tax credits despite the fact that they owed what was often significant amounts of back taxes to the IRS. In a report to Congress last Thursday, the GAO said FHA insured more than $1.44 billion in mortgages for 6,327 borrowers who owed nearly $78 million in unpaid taxes to the IRS. Of these, 3,815 also rec...