Will Taxpayers Have to Bail Out FHA?
The Federal Housing Administration stepped up to guarantee low-down-payment mortgages for riskier buyers after the mortgage market crashed. Now with many of them in default, the FHA’s losses have mounted, and it’s possible that its reserves will fall below the 2 percent level required by law. If that happens, taxpayers may have to bail out FHA.
Some housing analysts believe that this will lead to tighter restrictions on FHA mortgages. “It absolutely changes the political dynamic once you have to ask taxpayers” for money, says Lisa Marquis Jackson, vice president for John Burns Real Estate Consulting.
Source: The Wall Street Journal, Nick Timiraos
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