Is the FHA Headed for a Bailout?

" the Federal Housing Administration. May need its own taxpayer rescue you this congress look to expand the home buyer tax credit. More and more the mortgages backed by the FHA are falling into default potentially. -- American taxpayers on the hook for billions in housing lost Peter Barnes in Washington warned the F atrium. Well hi Brian some intrigue inside the beltway over the FHA its finances and cancel press conference the FHA is an important agency that has been critical to stabilizing the housing market. And allows qualified homebuyers to buy a home. -- as little as three and a half percent down because it provides government insurance against mortgage default. And because banks have cut their bank lending their lending back so much it is now insuring more than a quarter of all new mortgages making -- a critical player in the mortgage market a lot of people would not be able to buy a home right now without the FHA. But like a lot of banks the agency has experienced rising defaults and foreclosures because of the recession and the collapse of the housing market as a result it has been losing a lot of money. What FHA critic told congress last month that the agency will require up 54 billion dollar bailout."

" In the next two to three years. In the mortgage insurance industry which is that what FHA fundamentally is there's a basic rule when you're in a hole stop digging and FHA continues to date. And it's going to be very hard to in two years to say what pushed him over the brink was -- the 070809. It was at 2010 loans at some point I think they're going to need a bailout."

" Now the FHA denies -- will need a bailout it claims it has thirty million dollars in cash on hand to cover anticipated losses to reduce losses it says it has launched a crackdown on fraud and improved credit policies and it says because his business is booming it will be taking in more revenue to improve its financial condition. Now the FHA was supposed to release a report at a press conference yesterday the report was expected to show. That a special fund used to cover unexpected losses has fallen below eight. 80%. Threshold level required by congress to ensure the agency's financial help. At the last minute the agency canceled a press conference which has got some critics speculating the report contained some really bad. News FHA says some analysis of the report from an independent actuary. May not have been accurate and that the actuary is crunching its numbers again but the agency has not announced the new release time. For this report. Brian back -- you talked."