The Federal Housing Administration has tightened the rules for lending to homeowners, raising mortgage insurance premiums and requiring larger down payments for buyers with poor credit records. In addition to offering home loans of its own, the FHA also insures mortgages offered by other lenders, so the reach of these new rules is wider than it might otherwise appear.
These tighter regs might have prevented some of the damage that's been done to the housing market in previous years. It might have eliminated some of the rampant speculation that caused investors to buy eight or ten houses in Arizona and Florida, and might have kept people who really had no business getting an expensive mortgage out of the housing market. It might have tamped down the bubble before it had a chance to get out of control.
Now, of course, it's a bit late for all that. The bubble has blown up and popped. One side effect of these rules is that it will make it a bittougher for people to get mortgages, further slowing the housing recovery, although most lenders have already tightened their lending standards. This is a good first step toward preventing the next bubble - whenever that might have been.
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