Could it be that FHA and USDA loans will create the next sub-prime loan mess? Both of these loans are 100% government backed and guaranteed.

Currently, nearly one in three of all new mortgages are FHA and in Oregon, where 99% of homes qualify for the USDA loan, according to a seminar I went to with their representative, it looks a bit scary. Why does it look scary to me, well, FHA and USDA loans have very low downpayments and high risk borrowers.

One source, the Mortgage Bankers Association, tells us that 7.5% of new FHA loans are in serious delinquency. Serious Delinquency means the mortgage is at a minimum three months over due. One in eight FHA loans are delinquent-recently missed a payment. this is about three times the rate for conventional loans.

What does this mean? Hopefully, not another government bail out down the road. There's no doubt about it, buyers need loans to purchase homes but not at the expense of creating yet another problem!