About Government Refinance and Home Purchase Programs

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Reports came out today that in the face of increasing foreclosures on homes insured by the Federal Housing Administration, the cash reserves for the FHA will soon be dipping below mandated levels. We get this from a recent AP story:

The Federal Housing Administration said Friday its cash cushion will dip below mandated levels for the first time, but officials insist it won’t need a taxpayer rescue.

The agency, a growing source of funds for first-time homebuyers, faces mounting concerns that it will soon need a taxpayer bailout. As of this summer, about 17 percent of FHA borrowers were at least one payment behind or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association.

Rising defaults mean the FHA’s reserves may sink below the 2 percent mark required by federal law. The FHA says a study being sent to Congress in November is expected to show that ratio dipping below required levels for the first time.

David Stevens, the agency’s commissioner, however, said in an e-mailed statement that FHA “will not require taxpayer assistance.”

Comments (1) Posted by G.R.A. Admin on Friday, September 18th, 2009


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