A rise in lender claims on FHA mortgage insurance is raising red flags about lending abuse in low- and moderate-income neighborhoods.

Borrowers and neighborhoods "have to be protected" from lenders who may be making bad loans, foreclosing, and collecting their money from the government, said Gail Cincotta, executive director of the National Training and Information Center. The consumer activist group noted that despite a booming economy the number of claims paid under the Department of Housing and Urban Development program reached 78,890 in fiscal 1999, which ended Sept. 30, up from 60,884 in fiscal 1996.

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