WASHINGTON, June 24 (UPI) -- Mortgage down payments provided by nonprofit groups through a U.S. program have nearly doubled from previous years, officials said.
With the subprime mortgage crisis rippling through the housing and financial industries, the 74-year old Federal Housing Administration has tried to shut down programs that allow nonprofits to provide the down payment for mortgages, The Wall Street Journal reported Tuesday.
The FHA, which will request a $1.4 billion government subsidy next year, said 34 percent of the 200,000 loans it has backed in 2008 included down payments provided by nonprofit groups, the Journal reported.
The programs help the FHA fulfill its mission of helping first-time homeowners. But the loans have above-average default rates, the FHA said.
"I just smell a massive taxpayer burden coming," Sen. Kit Bond, R-Mo., told the newspaper
In 2003, 18 percent of FHA-backed mortgages included down payments provided by nonprofit groups. In 2000, nonprofits provided down payments for less than 2 percent of FHA-backed mortgages, the Journal reported.