From we’re told, the cash cushion in the FHA insurance fund – the one that covers a little more than $1 trillion of home mortgages – is just about gone. Evaporated. Vaporized. Then again, before everyone panics, let’s state for the record that when it comes to determining such things, the devil is in the details. There’s plenty of cash in the ‘Mutual Mortgage Insurance Fund’ -- but can it cover the anticipated losses that will come in the next three years? The good news is that FHA volumes are strong and higher premiums are resulting in more cash coming into the government insurer. The bad news is that FHA delinquencies from the agency’s ‘legacy’ book are increasing. If the fund goes negative, Treasury will extend credit to the agency and then it will become a matter of time before those draws are repaid. Whoever wins the election Tuesday will be dealing with this issue pronto.
Will the FHA Need a Government Bailout?
NOV 5, 2012 12:14pm ET
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