Markets & Economy

Federal budget projects $943 million bailout for FHA

NAR endorses risk-based premium pricing

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The Federal Housing Administration will likely need a $943 million taxpayer bailout in the next fiscal year to cover losses stemming from defaults on loans made both during and after the housing boom, according to a 2014 budget proposal released by the Obama administration today. If required, the bailout would be the first in the federal agency's 79-year history. The FHA has been hard-hit by defaults from housing bubble-era loans made from 2005 through 2008, with future losses estimated at $70 billion for loans made in 2007, 2008 and 2009 alone. The agency has until Sept. 30 to decide whether it will need a cash subsidy from the U.S. Treasury. FHA Commissioner Carol Galante said the agency still might be able to avoid taking the bailout, Reuters reported. "FHA, while still under stress from legacy loans, has made significant progress and is on a sound fiscal path forward," Galante said. In its last annual report, released in November, the U.S. Department of Housing and Urb...