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Home / Government / Federal Housing Administration’s financial cushion sinks (3:37 p.m. 11/12/09)

Federal Housing Administration’s financial cushion sinks (3:37 p.m. 11/12/09)

Washington (AP) — The Federal Housing Administration’s financial cushion has dipped to a dangerously low level but should remain above zero under “most economic scenarios,” according to the agency.

The FHA, a major source of money for first-time homebuyers, faces mounting concerns that it will eventually need a taxpayer bailout as losses grow from homeowners who lose their jobs and can’t pay their mortgages.

An independent audit being sent to Congress shows reserves for the fiscal year ending Sept. 30 fell to $3.6 billion, compared with $685 billion in outstanding insured loans. That’s a ratio of 0.53 percent and far below the 2 percent level Congress has required since the 1990s.

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