The FHA is smarting from the losses they are sustaining right now.  The Mortgage Bankers Association reports that over 18% of FHA borrowers are behind by at least one payment.  FHA is also investigating at least 15 mortgage companies for practices in placing some questionable borrowers into FHA loans, similar to the problems that led to the subprime meltdown.  These 15 are showing clientele that are defaulting at unusually high rates.

In order to stave off losses FHA (which insures about 30% of new home loans) is putting into place some new rules. Borrowers will have to pay a higher up front mortgage insurance fee of 2.25% of the loan rather than the current 1.75%.  Also, for borrowers with credit scores below 580 a down payment of at least 10% will be required.

FHA hopes that the new move will shore up its sagging cash flow stream.