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But FHA has already seen how quickly rampant abuse can crush the sweet dream of homeownership. During the late 1960s and early '70s HUD was hit by a rash of scams connected to its Section 235 loan program, through which the agency subsidized mortgage payments and, as it does now with 203(k), insured lenders against default. Those vulnerabilities led to many of the same problems now racking 203(k), including over-appraised property and shoddy construction. Poor New Yorkers and low-income home-buyers in cities across the nation abandoned their homes in droves. Fully 18 percent of the homes ended up in default; in Sunset Park alone 100 houses sat vacant. By 1973 the program was pulled.
