Another version of subprime loan emerges

11/20/2008 | Bloomberg Businessweek

Subprime-mortgage lenders and brokers are capitalizing on a federal program that was established years ago to encourage homeownership by insuring loans for borrowers of modest means. The strategy emerged after Washington expanded the Federal Housing Administration program as part of an emergency effort to bolster the U.S. economy. "Within the next 12 to 18 months, there is going to be FHA-insurance Armageddon," said Gary E. Lacefield, head of Risk Mitigation Group.

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