The feds have pretty much taken over the mortgage market since 2008’s near collapse of the global financial system, with the U.S. stepping in as lender of last resort.

And after years of getting hammered by critics on the right for allegedly fueling the foreclosure crisis by approving under-qualified homebuyers, the Federal Housing Administration is now facing new charges, this time from the left, that it is sticking minority and low-income borrowers with higher-cost loans.

But maybe it’s time to give Uncle Sam a break. That’s my conclusion after chatting with University of Massachusetts Boston researcher James Campen, who has spent time examining allegations hurled at the FHA from both sides of the political spectrum, only to find the evidence lacking.

And Campen should know, having spent years tracking lending by Boston-area banks, with an eye on subprime lending and foreclosures.

Troubling Questions

Campen recently took issue with a provocative new study, compiled by a Minnesota-based community outreach group, circulating among housing activists in Greater Boston and across the country. “Dangerous Disparities: The Rise in High Cost FHA Lending,” highlights the growing number of minority and low-income homebuyers stuck over the past few years with “high cost” FHA loans.

If nothing else, the report, penned by Jordan Ash, a former regional ACORN director now with Community Research for Action, raises some troubling questions. 

After being a minor player in the mortgage market during the bubble years, the FHA stepped in to pick up the slack in 2008 in a bid to prevent a complete collapse of the housing market – and maybe even another Great Depression. 

The private sector, from major banks to subprime lenders, shut down mortgage lending as global financial markets teetered on the edge. 

Today, the FHA guarantees as many as 30 percent of all mortgages in Massachusetts, up from a few percentage points pre-2008. 

But sometimes, the report suggests, the more things change, the more they stay the same. 

The report finds a correlation between being black or Latino and winding up with “high cost” FHA loans, defined as three percentage points or more above prime.

And Boston, sad to say, is a leader in this regard. While African Americans were 1.5 times more likely to wind up with more expensive FHA mortgages in major metro markets nationwide, here in the Hub, they were twice as likely.

Well, not so fast. Campen has looked at the numbers and he’s finding some major problems with this latest critique of the FHA’s mortgage lending standards.

The higher costs are not due to the FHA making one group of homeowners pay more than another. The federal agency, which insures loans, charges roughly the same premiums across the board. Rather, the loans are more expensive because the banks writing them are charging some borrowers more, presumably based on credit risk.

Right Is Wrong, Too

Where Ash, the report’s author, goes wrong, is not in the raw numbers, but in his interpretation of them, arguing there is no risk-based pricing with FHA-backed loans. That’s just not the case, Campen contends.

“I concluded he was wrong that there is no risk-based pricing on FHA loans,” noted Campen.

That said, he does not rule out that discrimination might be a factor, but the evidence presented does not prove the case.

“I am not sure FHA lenders are any different than any other lenders on this question,” he said. “There is probably discrimination as there is anywhere else,” adding it is the “individual lenders who set the interest rate.”

Campen does not put much stock in the poliical right’s critique of the federal government’s mortgage market rescue operations either.

The FHA and other major federal players in the mortgage market have been pummeled even more loudly by those critics arguing the feds are approving questionable buyers in a short-sighted attempt to prop up a shaky housing market.

There’s lots of tempting ammunition to hurl here, with default rates on FHA loans having soared since the fall of 2008, though they have begun to level off lately. That, coupled with bad loans piling up at Fannie Mae and Freddie Mac, has incensed conservative critics angry over another potential government bailout.

But default rates for FHA backed mortgages, while higher than they had been, are still significantly lower than prime mortgages by several points, Campen noted.

In a debate that tends to bring out the hotheads, more cool customers like Campen are needed.n