Federal budget documents indicate that the FHA Mutual Mortgage Insurance Fund could incur a loss next year -- the first in the program's 70-year history -- unless the Federal Housing Administration increases premiums or Congress approves a Bush administration FHA reform proposal.The president's budget proposal warns that the cost of rising single-family defaults could exceed revenues in fiscal year 2008. However, the Bush administration is not providing any funds to cover a shortfall. It appears that the administration expects the MMI fund to break even if the FHA increases premiums. The budget documents also indicate that the passage of the FHA reform proposal would put the MMI fund back in the black.

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