Own or Buying Home? FHA to Need Taxpayer Bailout for First Time in its 78 Yr History
For those who own a home or who might be buying one, it looks like the FHA is out of the reserves it keeps for use in guaranteeing mortgages. [mod edit]
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Any restrictions in available loans would be expected to further reduce the very slow pace of recovery in the residential real estate market.
The Federal Housing Administration will exhaust its capital reserves and faced a deficit of $13.5 billion at the end of September, according to the agency's independent annual audit set for release on Friday.
The report shows that the agency's reserves aren't adequate to pay for expected losses on the $1.1 trillion in loans that it guarantees, which means the agency is likely to require taxpayer funding for the first time in its 78-year history.
The report is likely to set off a political fight over the government's role backstopping the housing market, which already has required taxpayers to spend $137 billion to rescue Fannie Mae FNMA -0.36% and Freddie Mac FMCC +2.15% . Together with Fannie and Freddie, federal agencies are backing nearly nine in 10 new mortgages
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