Chances are nearly 50
percent that the Federal Housing Administration will need a bailout
next year if the housing market deteriorates further, the agency’s independent
auditor said ina report released Tuesday.
The
F.H.A., which offers private lenders guarantees against homeowner default, has
just $2.6 billion in cash reserves, the report found, down from $4.7 billion
last year.
The agency’s woes stem
from the national foreclosure crisis. In the last three years, the F.H.A. has
paid $37 billion in insurance claims against defaulting homeowners, shrinking
its cash cushion.
The auditors determined
the agency’s level of supplemental cash reserves by projecting losses on its
mortgage portfolio and counting them against expected premium revenue. This
year, the audit found that the F.H.A. supplemental reserve was less than
one-quarter of a percentage point of its current portfolio: $2.6 billion
against a $1.1 trillion mortgage portfolio, as of Sept. 30. Legally, the
housing agency is required to keep a 2 percent cash buffer, a target it has not
met since 2008. Read more at NYTimes
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