The FHA’s capital reserve was -1.44% of loan guarantees, or -$16.3 billion, according to a new independent audit. Last year reserves were still positive at 0.24% and $2.6 billion.
By law, the FHA — which insurers mortgages, mostly for low-income borrowers — is supposed to have a capital reserve of 2%.
The report prompted the chairman of a House Financial Services subpanel, Rep. Scott Garrett, R-N.J., to say that “a taxpayer bailout of the Federal Housing Administration is all but certain.”
And Ed Pinto, a resident fellow at the conservative American Enterprise Institute, says the truth is even worse. “
Illustration By Nate Beeler