Friday, November 16, 2012

Housing Bubble, Round Two

Are we headed for another real estate bailout?
The Federal Housing Administration, which has played a crucial role in stabilizing the housing market, said it ended September with $16.3 billion in projected losses -- a possible prelude to a taxpayer bailout.

The precarious financial situation could force the FHA, which has been self-funded through mortgage insurance premiums since it was created during the Great Depression, to tap the U.S. Treasury to stay afloat.

The agency said a determination on whether it needs a bailout won't come until next year.
....

The FHA and the Department of Housing and Urban Development, which oversees it, said the report "does not mean FHA has insufficient cash to pay insurance claims, a current operating deficit or will need to immediately draw funds from the Treasury."

A request for taxpayer money would come in President Obama's 2014 budget, set to be released in February, with a final determination of whether the FHA needs the funds coming next September. The FHA has permanent and indefinite authority to draw money from the Treasury, although it has never had to use that power.
If they don't, I'm sure that President Obama would find a way to give it to them anyway...

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