FHA premiums should cover losses

Only protracted depression would require taxpayer bailout

The Federal Housing Administration’s capital reserve ratio has fallen below statutory minimums, but the government mortgage insurance program will not require a taxpayer bailout unless the economy becomes mired in a depression, officials said.

In releasing the results of an independent actuarial study, Housing Secretary Shaun Donovan and FHA Commissioner David Stevens today said that in the event of a second severe recession, FHA’s capital reserves would be wiped out, but premiums from insurance written in coming years would be sufficient to cover losses.