For the first time in the history of the Federal Housing Administration (FHA), with its mortgage fund a minus $13.5 billion, the agency may need a government bailout by October, as HousingWire tells MHProNews. FHA Commissioner Carol Galante said, “The President’s budget projects that FHA may need a $943 million credit from the U.S. Treasury in October to make certain sufficient reserves are on hand today to cover projected losses over the next 30 years. FHA is taking every appropriate action to reduce the likelihood that such assistance is needed.” The agency may not make a final decision until Sept. 30, and attributes the financial stress to loans insured up to 2009, and to reverse mortgage programs. Housing and Urban Development (HUD) Secretary Shaun Donovan says the projected $13.6 billion shortage in capital reserves has been reduced to $943 million as a result of FHA recovering older loans, increasing some premiums, and making changes to the reverse mortgage program.
(Image credit: HUD-Gov)