Hardisky, who teaches science at Lankenau High School in the Andorra section of Philadelphia, settled on a $150,000 mortgage through Gateway Funding in Horsham that will be insured by the resurgent Federal Housing Administration.
Through July, the FHA insured 5,968 loans in the Philadelphia region, 30 percent more than during the same period last year.
The agency's market share here, in dollar terms, had fallen from 9.2 percent in 2001 to 1.8 percent in 2005, the last year detailed federal home-loan data are available. Nationally, the FHA's market share had tumbled from 5.3 percent in 2001 to 1.9 percent last year, while subprime mortgages soared from 7.2 percent to 20.1 percent of the market over the same period.
"Our pockets were picked in a sense during that period of time," said Engram A. Lloyd, director of the FHA's Philadelphia Homeownership Center, which is part of the U.S. Department of Housing and Urban Development and covers 15 states.
Lenders said the subprime and exotic-mortgage boom - with 100 percent financing and no proof of income - was the biggest factor in the FHA's decline. Similarly, the renewed popularity of FHA loans, "has more to do with the subprime fallout than with the changes they made" at FHA, said Gary Gordon, senior vice president and retail underwriting manager at Sovereign Bancorp Inc.
Others say Fannie Mae, a government-sponsored company that buys mortgages from lenders for resale on the secondary market, also eroded the FHA's market share by developing programs for borrowers with less-than-perfect credit.
Since the beginning of 2006, the FHA has fought to regain market share by streamlining the appraisal process, eliminating restrictions on closing costs, adopting electronic processing, and allowing lenders to do their own insurance approvals, with spot checks to ensure sound underwriting.
