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Is the FHA Effectively Condoning Mortgage Fraud?

[If a buyer cannot come up with a 3% down payment, they are in no position to handle a sudden rise in taxes or insurance, or any type of emergency repair. ]

Actually, you've got two factors there:

1- They're not saving ANY money. If you rent an apartment for $800/month, and you want to buy a $100k home, first and last month's rent gets you more than halfway home.

2- If they have the down payment and that's all they have, and then they use it for a down payment, they're back to square one, as most average Americans have no savings.

There are other issues that are contributing to and exacerbating the problem.

Their lack of a down payment demonstrates their inability to save...