Federal Housing Administration
The Federal Housing Administration (FHA)
FHA is the oldest of the federal housing agencies. As mortgage financing has dried up in the financial crisis, the FHA stepped into the gap and become the main source of financing for buyers who can't make a big down payment or who want to refinance but have little equity. FHA provides home mortgage insurance to lenders; if the borrower should fail to make payments and goes into foreclosure, FHA will insure the lender against most of its losses. In contrast to previous history, FHA’s net position has deteriorated rapidly since the financial crisis began in 2007 while its outstanding guarantees are rising rapidly. Rising mortgage defaults could force the Federal Housing Administration to seek a taxpayer bailout to keep it capitalized.
| FEDERAL HOUSING ADMINISTRATION |
|---|
| Balance Sheet |
| Disbursed*: $0 |
| Current outstanding: $0 |
| Public Funds |
| Maximum at-risk: $352.08B [1] |
| Current at-risk: $352.08B [2] |
* See the methodology and glossary for definitions of "disbursed," etc.
Contents
Funding agency and aid type
Mortgage insurance to cover bank losses.
Who benefits
Borrowers and mortgage lenders.
Banks. Injections of funds to keep them afloat.
Notes
In 2009, FHA had outstanding liabilities of more than $757.2 billion in single family and multi-family mortgage programs, an increase of $225.5 billion from 2008 ($531.7 billion) and $352.0 billion from 2007 ($399.96 billion). [3]
An examination of FHA annual report over three years indicates losses of $16.5 billion from 2007-2009. [4]
Articles and resources
Related SourceWatch articles
References
- ↑ SIGTARP, in its July 2009 report, gave an estimated total potential taxpayer support based on the increases in residential mortgage guarantees it had mad since 2007: “Federal Housing Administration (“FHA”) — Total Potential Support: $134.5 Billion. FHA provides home mortgage insurance to lenders; if the borrower should fail to make payments and goes into foreclosure, FHA will insure the lender against most of its losses. FHA is the oldest of the Federal housing agencies. In 2008, it had outstanding liabilities of more than $576.4 billion in single-family and multi-family mortgage programs, an increase of $134.5 billion from the previous year.” (Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), “Quarterly Report to Congress July 21, 2009”, p. 158.) The $576 billion figure, from SIGTARP’s footnote, was a figure given directly by FHA that was not a year-end figure. The numbers here are year-end figures based on FHA annual financial reports (see the “notes” of the FHA section) and use the similar SIGTARP method of using the increase in residential mortgage guarantees since the beginning of the financial crisis in 2007.
- ↑ SIGTARP, in its July 2009 report, gave an estimated total potential taxpayer support based on the increases in residential mortgage guarantees it had mad since 2007: “Federal Housing Administration (“FHA”) — Total Potential Support: $134.5 Billion. FHA provides home mortgage insurance to lenders; if the borrower should fail to make payments and goes into foreclosure, FHA will insure the lender against most of its losses. FHA is the oldest of the Federal housing agencies. In 2008, it had outstanding liabilities of more than $576.4 billion in single-family and multi-family mortgage programs, an increase of $134.5 billion from the previous year.” (Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), “Quarterly Report to Congress July 21, 2009,”, p. 158.) The $576 billion figure, from SIGTARP’s footnote, was a figure given directly by FHA that was not a year-end figure. The numbers here are year-end figures based on FHA annual financial reports (see the “notes” of the FHA section) and use the similar SIGTARP method of using the increase in residential mortgage guarantees since the beginning of the financial crisis in 2007.
- ↑ Federal Housing Administration, Annual Management Report, Fiscal Year 2008, http://www.hud.gov/offices/hsg/fhafy08annualmanagementreport.pdf, Table “Guaranteed Loans Outstanding,” p. 56.
- ↑ Federal Housing Administration, Annual Management Report, Fiscal Year 2009, Consolidated Balance Sheets, p. 35, available at http://www.hud.gov/offices/hsg/fhafy09annualmanagementreport.pdf . Losses: 2009 with $4 billion; 2008 with $10.7 billion; 2007with $20.5 billion.
External resources
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