Tuesday, December 4, 2012

FHA another Fannie or Freddie?

In an F.H.A. Checkup, a Startling Number - NYTimes.com: "DO we have another Fannie or Freddie on our hands — another mortgage giant headed for a rescue? Like Fannie Mae and Freddie Mac before it, the Federal Housing Administration is suffering in a mortgage hell of its own making. F.H.A. officials say they won’t need taxpayers’ help, but we’ve heard that kind of line before. The F.H.A. backs $1.1 trillion of American mortgages and, by the look of things, it’s in deep trouble. Last year, its mortgage insurance fund was valued at $1.2 billion. Today that fund is valued at negative$13.48 billion. . . . The F.H.A., a unit of the Department of Housing and Urban Development, is not about to stop insuring mortgages. Its officials say that without the F.H.A., people would have a tougher time getting home loans, and the housing market would suffer. (The F.H.A. insures loans of up to $729,750 in certain areas and requires down payments as low as 3.5 percent.) But the sharp decline in the fund’s value is a stark reminder that the mortgage mess is still very much with us, even as the real estate market seems to be recovering. In November 2011, for example, the F.H.A.’s auditor projected that the fund’s value would climb to $9.5 billion this year. The agency acknowledged that its financial position is a hostage to insured loans that still have “significant foreclosure and claim activity yet to occur.” Whether the F.H.A. will have to turn to the Treasury for help, of course, remains to be seen. . . ."

Housing and mortgage mess continues.


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