Senate appropriators are concerned that the Federal Housing Administration single-family program is becoming a "lender of last resort" and needs to do a better job of educating homebuyers."FHA is clearly becoming a lender of last resort, taking on the most risky mortgages, especially those likely to default," according to a report that accompanies the Department of Housing and Urban Development fiscal year 2006 appropriations bill. The FHA default rate has increased from 2.99% in fiscal 2000 to 6.9% in fiscal 2004, while claims have increased from $5.5 billion to $8.5 billion over the same period. In approving the Treasury, Transportation, and HUD appropriations bill, the Senate Appropriations Committee directed HUD to educate FHA homebuyers about the value of a home inspection. Without a home inspection, these purchasers may find themselves responsible for high-cost repairs that that they cannot afford, thus "putting the home at risk of foreclosure," the committee report said. The TTHUD appropriations bill provides $185 billion in loan commitment authority for the FHA and gives Ginnie Mae the commitment authority to guarantee $200 billion in mortgage-backed securities in fiscal 2006.

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