The fiscal year 2012 actuarial report shows that Federal Housing Administration (FHA) loans originated in fiscal-year 2003 through fiscal-year 2009 continued to deteriorate in terms of their cumulative claim rates.

This deterioration is largely due to plunging house prices starting in 2007 and a sizeable share of FHA single-family loans with seller-funded downpayments. Congress banned seller-funded downpayments on FHA-insured loans in late 2008 due to high default rates.

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