When the government last year doubled the amount the FHA will guarantee on a home loan, to more than $700,000, it moved the agency into uncharted territory: backing loans for the middle-class and the wealthy, too. It also moved the FHA, designed to help low-income buyers who can't raise a hefty deposit, into expensive cities like San Francisco, where there had never been an FHA loan before last year, the New York Times reports.
Now they're backing six a week there, and the higher limit is proving so popular that it may be politically unfeasible to cut back as planned, when the market recovers. All of which means a new burden, and new risks, for taxpayers. "It was kind of crazy we could get this big a loan,” said one San Francisco man who, with a couple of friends, got FHA backing for a home worth nearly $1 million. “If a government official came out here, I would slap him a high-five."