A November audit of the Federal Housing Administration showed that the agency’s significant financial woes largely are due to its practice of offering no-down-payment mortgages to low-income borrowers, and the years 2007-09 were particularly devastating, The Wall Street Journal reported Nov. 26.

The FHA’s significant $16.3 billion shortfall stemmed from such programs as one that allowed home sellers to finance down payments for buyers through several nonprofit groups, which would offer them as a “gift.”

While such seller-funded down payments accounted for only 4 percent of FHA’s outstanding loans at the end of September, they represented 13 percent of all the seriously delinquent mortgages the FHA backs, the Journal reported.

The FHA had repeatedly urged Congress to put an end to the various no down-payment programs, but lawmakers and lobbyists wanted the programs to continue, fearing their cancellation would cause collateral damage to the housing market.

The FHA currently faces $70 billion in claims on mortgages it insured between 2007-09, claims it might have avoided had the no-money-down option not been available to borrowers who could not have otherwise afforded to buy homes, the Journal reported.

If the FHA had avoided these no-money-down programs, it would be in the black for $1.77 billion, the Journal noted.