The Federal Housing Administration will likely request an infusion of Treasury funds to account for losses incurred in the current fiscal year, Reuters is reporting today, based on information from sources who are familiar with the situation.
In April, the Obama Administration projected that the FHA would need bailout to cover $943 million in losses across its loan portfolios in the fiscal year ending September 30, largely due to reverse mortgage-related losses.
The agency has maintained that its current and most recent books of business are cash flow positive, and are leading to greater stability among the insurance portfolio.
However, FHA has failed to meet its capital reserve ratio in recent years—a minimum which has been set at 2%.
Republican members of Congress spoken against supporting FHA in the form of a bailout, likening the agency’s need for capital to that of Fannie Mae and Freddie Mac.
“Hardworking American taxpayers are sick and tired of having to bail out Washington’s failed housing policies, whether it’s the nearly $200 billion bailout of Fannie Mae and Freddie Mac or a bailout of the FHA,” House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said Wednesday, according to The Hill.
The Department of Housing and Urban Development has not commented on the speculation regarding the possible bailout.
Written by Elizabeth Ecker