Data from RealtyTrac showed that the number of homes in foreclosure listings in the country rose by about 6 percent in February of this year over January, and 30 percent over February of last year.
One out of 440 homes was included in foreclosure listings despite foreclosure moratoriums announced by several banks and mortgage lenders.
And adding to the growing U.S. foreclosure listings problem is the rise in the number of distressed loans owned or guaranteed by the U.S. Federal Housing Administration (FHA).
Senator Kit Bond said that the mortgage insurance program of FHA is a bomb waiting to explode. He pointed out that Obama and the Congress should not place too much financial responsibility on the cash-strapped agency.
During a hearing of the Senate subcommittee, Bond noted that the credit capacity of taxpayers has been maxed out.
Meanwhile, Senator Patty Murray said that her constituents are concerned that they will be left to shoulder the bad loans that the FHA purchased and the impact of the growing number of homes in foreclosure listings.
She added that taxpayers would be the one left to pay the bill in the event that the FHA purchased loans that would go into defaults in the long run.
However, U.S. Secretary of Housing and Urban Development Shaun Donovan assured some senators that there is no possibility that the FHA will face the losses caused by the subprime sector.
He explained that this is because the FHA did not own or guarantee loans for luxury properties that have values that dropped drastically, especially in places with high foreclosure listings such as California and Nevada.
Last February, about 7.2 percent own and guaranteed-FHA loans were either overdue by 90 days or in some kind of foreclosure proceedings. These figures represented a 5.8 percent rise in August of last year.
If losses from loan defaults surge further, the FHA would be constrained to raise funds by either seeking subsidies from taxpayers or upping insurance premiums on first-time borrowers.
The FHA has been giving out home loans to less creditworthy borrowers for low down payment.
