At least one national group expects the FHA to become a savior for people struggling with the continuing subprime crisis.

The National Association of Mortgage Processors, or NAMP, recently predicted that the FHA and its loans will take over for subprime mortgages. About one in five people who obtained subprime mortgages in the last two years will wind up in foreclosure, according to the Center for Responsible Lending, a nonprofit advocacy group.

More than a half-million borrowers have lost their homes in the subprime market, and industry experts project that another 2 million or so are likely to meet a similar fate as the subprime crisis spirals.

But the NAMP believes FHA loans can help stop the bleeding.

“As the government’s largest mortgage program, the Federal Housing Administration loan has been basically a low-down payment source for first-time home buyers with issues with their credit, but who could fully document their income and assets,” the NAMP said in a statement.

In addition, a proposed overhaul of the FHA could make government-backed loans every more tenable for homeowners. To learn more about FHA loans and how to take advantage, contact one of our loan specialists today.

WASHINGTON — Federal Reserve Chairman Ben Bernanke said Thursday that he did not believe the growing number of mortgage defaults would seriously harm the economy.

Facing criticism from members of Congress about lax regulation, Bernanke also promised that the Fed would do everything possible to crack down on abuses that have put millions of homeowners in jeopardy of defaulting on their mortgages.

“We at the Federal Reserve will do all that we can to prevent fraud and abusive lending and to ensure that lenders employ sound underwriting practices and make effective disclosures to consumers,” Bernanke said in remarks prepared for a financial conference in Chicago.

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WASHINGTON - Congress is looking at reforms to risky home lending practices, although a House subcommittee hearing on Tuesday suggests lawmakers are still sorting out the complexities of the mortgage market and wondering whether reforms will be helpful.

With the number of foreclosures nationally jumping 47 percent in March from a year ago, lawmakers are weighing whether new lending rules are needed or whether the market is already self-correcting.

Last week, Sens. Charles Schumer, D-N.Y.; Sherrod Brown, D-Ohio; and Bob Casey, D-Pa., introduced a bill that would mandate tougher federal standards for mortgage lenders, even as Senate Banking Committee Chairman Christopher Dodd, D-Conn., was emphasizing that increased regulatory oversight and voluntary reforms by lenders are preferable to legislation.

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