The New York Times’ David Stretfield has a very good piece today about Housing and Urban Development’s Federal Housing Administration pouring money into the real estate market. The Obama administration is “guaranteeing the mortgages of middle-class and even upper-class homebuyers.” And FHA is “underwriting loans at quadruple the rate of three years ago even as the its reserves to cover defaults are dwindling.”

In other words, even with mortgage delinquencies at a record high, the federal government is incredibly doing everything it can to create a housing bubble where consumers can only afford homes if FHA is giving them a loan.  At a time when the Obama administration takes heat for economic recovery proposals with the cry that it will grow the deficit, it’s unjust that a program that actually encourages  the same housing bubble that lead to the economic crisis has got relatively little scrutiny. Why does the real estate industry deserve such favorable federal programs?

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