Ex-FHA Chief Sees New Trend in Foreclosures

Many subprime borrowers who stretched their financial resources to buy a home are running into trouble and creating a new trend in foreclosures, according to a former Federal Housing Administration commissioner.Pockets of foreclosures are developing in the middle of relatively new subdivisions, former Housing Commissioner William Apgar told a Federal Deposit Insurance Corp. advisory committee. The Harvard University lecturer noted that builders "push-marketed" subprime loans with teaser rates as "affordability" products to keep home sales going and to clear their inventories. "Major homebuilders are some of the largest holders of foreclosed properties in Texas," Mr. Apgar said. He also said that defaults on these subprime affordability mortgages are "going to ultimately lead to a ramp-up" in foreclosures. Mr. Apgar is a lecturer at Harvard's Kennedy School of Economics.