FHA premiums should cover losses

Only protracted depression would require taxpayer bailout

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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.