Relegated to the back burner during the recent housing boom, the Federal Housing Adminstration is seeing borrowers once again flock to the Depression-era agency. Demand for FHA-insured loans is the highest it has been in decades, thanks to Congressional-led efforts to revitalize the FHA lending program amid continuing troubles in the U.S. mortgage and housing markets. Industry publication Inside Mortgage Finance reported Tuesday that Ginnie Mae MBS production, as a result, has surged in the first quarter of 2008. Ginnie Mae, which guarantees loans issued by the FHA, saw MBS issuance rise 94 percent year-over-year to $35.7 billion for the quarter; the agency issued just $18.4 billion one year earlier. Ginnie’s MBS share reached 11 percent during Q1, as a result, the publication reported. Wall Street firms flocked to FHA lending as well during the quarter, with J.P. Morgan Chase posting an eye-popping 427 percent increase in Ginnie Mae activity; the company produced $6.5 billion – or 18 percent of the total market – in Ginnie-backed MBS for the quarter, according to statistics culled by the publication.

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