FHA Red Ink May Be $32.8 Bil, Double Official Audit

 

 

 ” The Federal Housing Administration is in the red, according to an official audit released Friday, making a taxpayer bailout “all but certain.” But the reality may be even worse.

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