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Will the FHA Need a Government Bailout?

NOV 5, 2012 12:14pm ET
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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.

Comments (3)
We live in an odd world where mortgage originators are making billions in profits while saddling the taxpayer with untold trillions of credit risk. And the taxpayer gets paid some chump change.
Posted by Sri S | Monday, November 05 2012 at 2:05PM ET
We live in an odd world where mortgage originators are making billions in profits while saddling the taxpayer with untold trillions of credit risk. And the taxpayer gets paid some chump change.
Posted by Sri S | Monday, November 05 2012 at 2:06PM ET
That's the way the American "free market" works. All the goods flow from the many to the few at the top. Recent NMN articles indicated that CEO and CLO salaries were rising 10-12%/year, LO salaries 17%/year but the average worker salaries rose 2.5%.
Posted by | Monday, November 05 2012 at 2:32PM ET
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