The Federal Housing Administration said mounting losses from defaults on loans it backed during the housing bubble left its insurance fund with a $16.3 billion deficit for the fiscal year ended Sept. 30.
A report by an independent actuary that will be released today sets the table for a possible taxpayer subsidy for the government mortgage insurer for the first time in its 78-year history. It shows that the funds assets arent enough to cover projected losses on the $1.1 trillion portfolio of mortgages the agency insures.
In a statement issued yesterday, the FHA said the report didnt show it would need an immediate draw from the U.S. Treasury.
This does not mean FHA has insufficient cash to pay insurance claims, a current operating deficit, or will need to immediately draw funds from the Treasury, the agency said in the statement. The FHAs budget needs will be determined when President Barack Obama releases his fiscal-year 2014 budget in February, according to the statement.
House Financial Services Committee Chairman Spencer Bachus said yesterday that he had been told by agency officials that the FHA might need Treasury aid within a month. The agency doesnt need prior approval from Congress to receive a financial infusion from Treasury.
Because of the number of foreclosures, theyve indicated they will have to come to the American people and ask for money, Bachus, an Alabama Republican, said in an interview.
More than 17 percent of all FHA loans were delinquent in September, according to data on the agencys website.
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