FHA Denies It Needs a Bailout. Who the Hell Was Offering?!
Oh look! Another bailout!
The Federal Housing Administration's assertion that it will not need to ask for a bailout even though its loss reserves are eroding was met with skepticism Friday from the agency's longtime critics.
FHA Commissioner David H. Stevens said Friday that the surplus fund set aside to cover unexpected losses on mortgages backed by the agency will fall below the 2 percent threshold required by Congress when the next fiscal year starts in October.
The housing bust has taken its toll on the agency, Stevens said. But he insisted that the FHA will not ask taxpayers to kick in for the shortfall or raise premiums because it has more than $30 billion in cash to cover future losses. He dismissed as erroneous previous claims by government officials that those were the only two options available to the agency should its reserves dip below mandatory levels.
But critics of the FHA said they question the agency's financial soundness. They say that the job market and overall health of the economy are big unknowns going forward, and further deterioration on either front could send FHA scrambling for a bailout.
The shrinking loss reserves "is just the tip of the iceberg as job losses continue to mount, and more and more homeowners are expected to lose value in their homes," Sen. Christopher S. Bond (R-Mo.) said in a statement. "It's critical we address FHA's problems now because the taxpayer credit card is maxed out."
Everything is under control, people, nothing to see here...