Sloppy Underwriting, Probable Fraud Driving Surging FHA Default Rates In Florida?

The Wall Street Journal's Developments Blog reports:

• While FHA serious delinquencies have soared since last summer, nowhere is that more true than in Florida, at least according to the Monthly Report to the FHA Commissioner for January (released last week). Of the 50 metro areas with the highest default rates in the FHA’s Single-Family Mortgage Program in December 2008 (the latest data shown in the report), 14 were from Florida – with five Florida metros making the top-ten list.

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• While plunging home prices and a sharply deteriorating economy were behind much of the horrible performance of FHA loans in Florida, there appears to be something else going on: sloppy underwriting, and probable fraud. Reports of sharply increasing early payment defaults (where borrowers either make no or just one payment before defaulting) are apparently heavily concentrated in Florida [...].

For more, see Florida: The Not-So-Sunshine State for FHA.

In a related story, see The Washington Post: The Next Hit: Quick Defaults (More FHA-Backed Mortgages Go Bad Without a Single Payment).