The Federal Housing Administration actuarial report to Congress, expected this week, may show the need to tap Treasury to bulk up reserves to cover rising mortgage delinquencies. The potential draw is the first time in the 78-year history of FHA a bailout is needed, reported the Wall Street Journal.
A Treasury draw would put into question the government’s role in housing as it continues to attempt and stabilize the housing recovery. The government already spent $137 billion to bail out Fannie Mae and Freddie Mac.
This year the FHA avoided taking a taxpayer fund because the agency received a one-time payment worth about $1 billion because of claims that mortgage servicers botched foreclosures.
The FHA projected last year that it would have a positive economic value of $9.4 million in 2012. The report is expected to show the opposite happening.
However, HUD told HousingWire that there is no official comment until the actual report is released.
The FHA insured about 739,000 loans that were at least 90 days past due or in foreclosure, an increase of more than 100,000 loans from the previous year.
FHA acting commissioner Carol Galante said at the HousingWire Reperform Conference in October that the boom-time mortgages are the ones to keep an eye on, not the new originations developed between 2009-2011.
The FHA insures close to 7.6 million loans, which is total outstanding balance of $1.1 trillion, tripling the amount the agency backed five years ago.