What is the role of the FHA in an FHA-insured loan transaction?
Correct Answer
C) The FHA insures the loan made by an approved lender, reducing the lender's risk of loss from borrower default
The FHA does not lend money directly. Instead, it insures loans made by FHA-approved lenders, protecting lenders against losses if borrowers default. This insurance enables lenders to offer more favorable terms.
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