At least one part of the Obama administration is trying to do something about abusive mortgage lending. The Washington Post’s Dina ElBoghdady reports that Housing and Urban Development’s Federal Housing Administration wants stricter requirements on the home loans that it has traditionally insured — one of the oldest ways (FHA has been around since the 30′s) that the federal government has boosted the housing market. In order for FHA to guarantee a loan, HUD Sec. Shaun Donovan wants borrowers to put down a five percent down payment and have a certain minimum credit score (the article just says that Donovan thinks the current score of 500 out of 850 is too low).

ElBoghdady reported a few weeks ago that FHA’s reserves are perilously low, because so many borrowers they insured defaulted. Beyond the long-term strategy he’s supposed to outline, Donovan needs to do something now or else taxpayers will have to bailout what has been a self-sustaining federal agency.

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