Industry NewsMortgage

FHA won’t need bailout, says report

Total capital resources increase $1.5B since last year
Published on Nov 16, 2010

Business is booming for the Federal Housing Administration's mortgage guarantee program, and the solid performance of loans insured since 2009 means that FHA won't require a taxpayer bailout even under the most dire circumstances, according to independent actuarial studies released today.Anticipated claims from loans insured at the height of the housing bubble continue to weigh on FHA's capital reserve ratio, however, and it will probably be 2014 or 2015 before it's built back up to a congressionally mandated 2 percent, the Department of Housing and Urban Development said in its annual report to lawmakers.The capital reserve ratio measures reserves in excess of what's needed to cover projected losses over the next 30 years. The independent actuarial reviews of FHA's mutual mortgage insurance (MMI) fund estimated that FHA's capital reserve ratio has dropped to 0.5 percent of total insurance-in-force.That's down from 0.53 percent a year ago, but the difference was mostly due to the use o...

Comments