The Federal Housing Administration expects to have a $1.7 billion budget shortfall for fiscal year 2013, which is entirely due to the FHA reverse mortgage program, which will trigger a mandatory draw from the U.S. Treasury.
However, senior administration officials claim FHA does not need this draw and the $1.7 billion will simply be moved from one account at Treasury Department to another at the department.
Obama administration officials told reporters that FHA has $30 billion in cash in an off-budget account to pay claims on defaulted loans.
FHA also is generating more revenues that it is paying out in claims and other expenses, an official said.
On average, FHA is generating $8 billion to $10 billion in revenue per quarter and paying out $4.5 billion to $5.5 billion on claims and other expenses, the official said.
However, claims can exceed $8 billion per quarter when FHA sells large pools of nonperforming loans to investors.
The FHA forward single-family program exceeded its budget target by $3 billion and the FHA reverse mortgage program missed by nearly $5 billion. As a result, FHA will have to take a $1.7 billion mandatory draw.
Congress passed a FHA reform bill before the August recess to stem losses to the FHA Home Equity Conversion Mortgage program. Reverse mortgage lenders are required to implement all the changes by mid-January.