The Federal Housing Administration, which subsidizes mortgages for home buyers who can't rustle up typical down payments, is paying for its liberality. Two of the regions with the highest default rates are Punta Gorda (18 percent) and Fort Myers-Cape Coral (15 percent).  Here's what the Wall Street Journal had to say today:

A spokesman for the FHA said 7.5% of FHA loans were "seriously delinquent" at the end of February, up from 6.2% a year earlier. Seriously delinquent includes loans that are 90 days or more overdue, in the foreclosure process or in bankruptcy.

Since the collapse of the subprime mortgage market in 2007, most home loans for people who can't afford a sizable down payment are flowing to the FHA. The agency, which is part of the U.S. Department of Housing and Urban Development, insures mortgage lenders against the risk of defaults on home mortgages that meet its standards. FHA-insured loans are available on loans with down payments as small as 3.5% of the home's value.

The article points out that the FHA's share of the U.S. mortgage market swelled to nearly a third of loans originated in the fourth quarter of 2008. In 2006, when recklessly underwritten loans were plentiful on the non-FHA market, the agency covered only 2% of loans.

So what we have here is a government, amid signs of softening in the housing market in 2006-2007, handing out cheap, subsidized loans to home buyers who were underwater the moment values dropped more than 3.5 percent, the amount of their downpayment.

To the FHA's credit, it specializes in full documentation loans, minimizing the "liar loan" phenomenon of phony baloney reported incomes. But the government's got to be smarter than that.