The U.S. Federal Reserve estimates that of the 12 million American homeowners who have negative equity, 3 million--or 1 out of every 4--are borrowers with FHA-insured loans.

The U.S. Federal Reserve estimates that of the 12 million American homeowners who have negative equity, 3 million--or 1 out of every 4--are borrowers with FHA-insured loans.

Part of the problem, say experts, is the fact that FHA loans require miniscule down payments on homes, some as little as 3.5 percent of the purchase price.

"Low down payment lending in a weak housing market and weak economy begs the question whether we are setting up the FHA to have a multitude of failures down the line," said CoreLogic's senior economist Sam Khater.

According to Reuters, one out of every ten home loans taken in the last two years--which represents more than 1 million Americans--"now owe more on their loans than their homes are worth."

"This is creating a new wave of underwater borrowers," said Gary Shilling, a veteran financial analyst.  "We have all three branches of government trying to keep people in four bedroom houses who can't afford chicken coops."

As Americans struggle in the Obama economy, the housing market continues to flounder.  Indeed, 7.5 percent of all home loans taken as recently as four months ago are now under water.
"The overwhelming majority of the U.S. is still seeing home prices decline," said CoreLogic senior economist Sam Khater. "Many borrowers continue to be quickly wiped out."
The problem, say experts, is the massive increase of FHA-insured loans issued over the last several years:

FHA-insured loans were begun during the Great Depression and have traditionally been used to enable lower income Americans to get mortgages.

Historically, FHA loans accounted for 8 percent to 12 percent of the mortgage market. According to the FHA, this rose to 30 percent in late 2009 and to about 50 percent for first-time buyers at the height of the financial crisis.
States like Florida have been among the hardest hit.  Since October 2010, home values in that state have plunged an average 30 percent and more than 50 percent since the height of the 2006 housing bubble.

Last month President Barack Obama said he is not satisfied to "sit by and wait for the housing market hits bottom."