Federal Housing Administration May Need A Bailout
- Posted on November 15, 2011 at 11:14am by
Becket Adams
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Thought the housing market couldn’t get any worse? Think again.
Apparently, the housing situation is in such poor shape that the Federal Housing Administration (FHA) may soon need a bailout.
The FHA was created in 1934 as a part of the new deal. The idea was that it would insure loans made by banks for building and/or buying a home. The supposed goal of the FHA is to improve housing standards and conditions and to provide financing via insurance. However, these goals have become increasingly difficult to support since the housing market collapsed.
Since the onset of the recession, the agency’s cash reserves have dropped to $2.7 billion, a level so low that there is a “close to a 50%” chance it will seek a bailout in 2012, the Wall Street Journal reports.
Last year the FHA backed a third of mortgages used to finance home purchases last year, up from just 5 percent in 2006, reports Newser.
The FHA raised insurance premiums and enforced tighter “risk controls” in an effort to avoid using Treasury funds, but now it looks like they will have no other option.
Reportedly, “auditors predict that it will need a bailout if home prices drop by more than 5.6 [percent] next year. The FHA has ‘permanent and indefinite’ budget authority so it won’t need to run any request for funds past Congress, which has reached a deal to raise the maximum size of loans the agency can insure,” Newser writes.
Technically, the FHA has the authority to bypass Congress to get the money it wants to continue operating.
The audit, to be released on Tuesday by the FHA, was prepared by Integrated Financial Engineering Inc, an analytics firm, the WSJ reported.
“Even in the tough economic environment, we have been successful in protecting the (insurance) fund. We still clearly see there are downside economic risks that we have to be vigilant about,” Carol Galante, acting commissioner of the FHA, told the Journal.
(h/t Newser)
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Comments (62)
CulperGang
Posted on November 15, 2011 at 5:18pm“Federal Housing” = taxpaid for institution run by bureacrats who obviously ran it into the ground. FIRE THEM ALL. Disband the bureau. Can’t wait for Sen Paul to occupy the White House….I know he is going to dismantle ALL failed bureaucracy.
MSM=False Flags of propaganda designed to DESTROY your confidence and independence of individuality.
Fox News is the flipside of CNN.
Report Post »itcagw
Posted on November 15, 2011 at 10:43pmI agree, Gov. Perry can add FHA to the government agencies he will get rid of.
Report Post »Zombee
Posted on November 15, 2011 at 5:09pmWhere are the Bail Outs for the Middle Class unemployed tax payers.? The abused American tax payers gets no breaks from the dictatorship in the White House and the clowns on Capital Hill. Its time for the American taxpayers to get out their torches and pitch forks and march on Washington. The current two party system is broken and beyond repair. It needs to be dismantled and the Constitutional Republic restored.
Report Post »P. Smith
Posted on November 15, 2011 at 3:39pmOH the administration is bailing more than that. Genetically modified salmon. Sounds great right. The Guardian exposes another one: http://www.guardian.co.uk/environment/2011/oct/18/gm-salmon-aquabounty Ya Aquabounty sounds great right?
But it couldn’t be connect to Soros, or Buffett making money by helping to destroy four dams on the Klamath River Basin AND the IRONGATE FISH HATCHERY now could it?
http://teapartyhobbits.wordpress.com/2011/11/11/soros-buffet-vs-siskiyou-farmers/
Congressman Mike Thompson introduced H.R. 3398, Klamath Basin Economic Restoration Act, waning $536 million to destroy the dams and touts $555 million from private funds, which we all know will be grants given to environmental groups and our money laundered through them. But HEY the Chromium 6 might be just a little problem. After two dams were destroyed in Oregon, the intestinal cancer rate has soared from $17.2% to 42.6% for the people down stream. Erin Brockovich anyone?
Report Post »gmoneytx
Posted on November 15, 2011 at 4:41pmHuh? I thought this article was about the FHA possibility…Did I miss something?
Report Post »thorkyl
Posted on November 15, 2011 at 2:57pmLet FHA go bankrupt
If FHA goes bankrupt, then HUD goes bankrupt
If HUD goes then Section 8 housing goes
If Section 8 housing goes then half of the welfare payments go with it
That is the political 4th rail
Report Post »Marci
Posted on November 15, 2011 at 3:19pmI so like your plan Thorkyl. Too bad the left and OWS movement doesn’t…they just want more!
Report Post »JRook
Posted on November 15, 2011 at 4:07pmright like no one saw this coming. Virtually all banks that hold a large portfolio of mortgages in the US is under water. The bank regulators are avoiding valuing any of their balance sheets.
Report Post »gmoneytx
Posted on November 15, 2011 at 4:41pmSounds good to me!
Report Post »smithclar3nc3
Posted on November 16, 2011 at 7:58amSection 8 housing is the most fraud filled program out of all of the programs. I live in an area where there are several “single moms” living in section 8 housing. They also bring in their boyfriends who have full time jobs to live on my tax dollars as well. He77 I had one neighbor who had two kids living with her in her section 8 housing along with her boyfriend who is an HVAC mechnic who makes more than me. She had another kid she couldn’t afford with him and section 8 moved her to a bigger house. The system is broke and the best thing to do is end it. How is it fair that I work my a55 off to pay for my family and others use section 8 to live for free witha full time pay check coming in.
Report Post »showmerancher
Posted on November 15, 2011 at 2:40pmLET IT FAIL! Shortly I doubt it will matter.
Report Post »cdavis2009
Posted on November 15, 2011 at 2:21pmSo, the banks and mortgage lenders were selling mortgages on overpriced homes with money that they didn’t have. They then sold securities backed by mortgages that had no real value. They did this with the mindset that the bubble would never burst and they would make money and never have to worry about the fact that they never had that much money to invest with in the first place. When the fine print kicked in people could no longer afford their overpriced mansions or the fees that the banks were charging to make their money foreclosures rose and the banks/investment institutions were stuck with books reflecting debt even though that money never existed in the first place. Am I getting this right? Then, to add insult to injury, they asked for taxpayer money to cover debts and promises to stockholders and pensions that were created through the use of mortgage backed securities even though the money was never really there in the first place. This makes my head spin! If the money never existed in the first place there can be no debt. There are lies but no debt. To ask for money to cover debts on money that never existed in the first place is theft. Stop asking for money, shut your doors and rebuild in an environment based in reality, not monopoly money.
Report Post »1casawizard
Posted on November 15, 2011 at 2:19pmIt’s too big to fail!!! We have to give everyone a home. That should be worth $500B. Let’s get more printing presses from china. We gotta make mo money.
Report Post »garbagecanlogic
Posted on November 15, 2011 at 2:14pmHell, why not. Pretty soon the entire Barry Soetero-Obama organiztion will be requesting one.
The U.S. Out Of The U.N.
Report Post »The U.N. Out Of The U.S.
progressiveslayer
Posted on November 15, 2011 at 1:14pmThe wells run dry and yet the parasites keep draining the host,weird how that happens.
Report Post »lukerw
Posted on November 15, 2011 at 2:05pmParasites are Mindless Consumers… only as weird as an Obama-dite!
Report Post »someonewhocares
Posted on November 15, 2011 at 2:17pmWhat a bunch of fools.
http://politicalbowl.com – Political Videos
Report Post »wingedwolf
Posted on November 15, 2011 at 12:40pmLike every other federal program.
Report Post »MidWestMom
Posted on November 15, 2011 at 12:52pmWell this ought to get our credit dropped another notch. Not that it matters – the country is toast regardless.
Report Post »Thetruththink
Posted on November 15, 2011 at 12:16pmFailed liberal ideas continued, unfortunately for a lot of us we fed from this trough. This is why we must ignore all media attacks against our candidates without court prooven evidence. Mr Cain, Mr Santorum, Michelle Bachman, Mr Paul with Newt as VP must be honestly researched, and thoroughly digested before we make our collective educated choice. This can not be a media driven popularity vote. Their history must be taken into account. There track record. Not the BS all the media outlets use to manipulate the masses. No NWO, or polished, smoothe talking corrupt politicians, Republican or Democrat.
Report Post »Vechorik
Posted on November 15, 2011 at 5:18pmHeck, I thought of Newt when I saw the headline FHA bailout.
You KNOW Newt took $300,000 from Freddie Mac to keep the Republicans from closing them down before the housing bubble? Newt is a snake — do some homework on him.
Report Post »Vechorik
Posted on November 15, 2011 at 5:32pmFox News is busy tearing down Newt (to make room for their candidate of choice, Romney)
quotes from Fox:
“The host used words about Newt such as: He’s not likeable, which was the problem with Kerry and Gore; and most people vote based on who they like.
Then he went further to put up a large graphic about Gingrich with some of his problems:
Supported TARP, now against it
Supported Cap N Trade, now against it
Infidelity
$300,000 fines for ethics violations
Freddie Mac pay out
Unusual six figure jewelry purchase
Of course he showed Newt and Pelosi doing the television commercial together for cap and trade.
Report Post »Then he said to his guest, the people are very frustrated right now with the government; and isn’t Gingrich the quintessential Washington insider?”
SpankDaMonkey
Posted on November 15, 2011 at 12:08pm.
Report Post »Let it fail, we’ll never know the difference………..
This_Individual
Posted on November 15, 2011 at 12:06pmFederal Housing Administration should be dismantled.
Report Post »CatB
Posted on November 15, 2011 at 12:09pmTell them to get the money from Dodd and Frank … their personal money! Everything traces back to Freddie and Fannie and these two crooks!
TEA!
Report Post »GODBLESSOURCOUNTRY
Posted on November 15, 2011 at 12:16pmAgreed! Nothing the government runs is sustainable…period. IMHO – the DoD is the only department that is worth a d*** – although extremely wasteful which needs serious attention.
Report Post »It is made up of our best and brightest soldiers and I am grateful for their service and my freedom.
NOBALONEY
Posted on November 15, 2011 at 12:04pmToo big to fail. TARP was just a slush fund for Washington! Fannie Mae, Freddie Mac, and the Federal Housing Administration are going to costs taxpayers trillions. While Raines, Waters, Frank, and Dodd walk.
Report Post »smithclar3nc3
Posted on November 15, 2011 at 12:10pmNot if the new Revolution turns French if that’s the case which it probably is raines,dodd,Frank and others blood will run in the streets along with their families and freinds.
Report Post »Thetruththink
Posted on November 15, 2011 at 12:03pmAnother corrupt failed liberal government program. As usual you always run out of other peoples money first, One by one to cause Kaos in society. Medi-care, Social Security are next, or our federal budget. We are bankruprt. Period. And americans have been kept in the dark for to long. We have been dumbed down by our educational institutions and there agenda. When will Americans stand up and lead and fight back? Darn do I want the media to paint lies about me and my family like Mr Cain, Mrs. Palin. I’m not so sure and that is what they want you to believe. Give me liberty or give me death!
Report Post »carbonyes
Posted on November 15, 2011 at 6:24pmI would give them a bail out by dismantling the entire FHA and sending them packing. The bail out would indirectly be for the US Government, meaning the American people, who would no longer have to fund the fiasco. It’s called downsizing.
Report Post »Timothy_Reid
Posted on November 15, 2011 at 12:01pmShow me where in the enumerated powers for any branch of the Federal Government listed in the constitution the FHA belongs…..
Report Post »smithclar3nc3
Posted on November 15, 2011 at 12:04pmSimple answer let the agency goes exstinct. It a small but good start in cutting spending.
Report Post »smithclar3nc3
Posted on November 15, 2011 at 12:08pmThe FHA has ‘permanent and indefinite’ budget authority so it won’t need to run any request for funds past Congress,
Report Post »When I read that I saw an UnCostitutional license to steal. The FHA has the power to simply take from the tax payers if it does than we are at the point of the original Revolution TAXATION WITHOUT REPRESENTATION
Timothy_Reid
Posted on November 15, 2011 at 1:07pmJust goe to show that simply because a thing is legal, doesn‘t mean it’s lawful. Most of the Federally established agencies are unlawful according to the US Constitution. They are enacted and setup under the “Necessary and Proper” clause. However this clause has been stretched beyond belief. Similar the the Establishment Clause in the First Ammendment being used to attack religion. That was never intended to do anything more than make sure there was no national religion. People have since and are currently using it to attack Christianity in general. However Christianity is not a religion per say. There are Lutherans, Baptists, Catholics, Protestants, Mormons, Seventh day Adventists, etc… which are all seperate religions but are covered under the umbrella of christianity defining the higher power that is worshipped. I could carry on and on and on but I thinkyou get the point.
Report Post »Eliasim
Posted on November 15, 2011 at 12:01pmI need to teach Glenn Beck something. The Holy Bible is a consolidation of many, many books. At the End of the Book of Revelation it says (in the Book of Revelation)22:18 “For I testify unto every man that heareth the words of prophecy of this book. If any man shall add unto these things, God shall add unto him the plagues that are written in this book. And if any man shall take away from the words of the book of this prophecy, God shall take away his part out of the book of life, and out of the Holy city and from the things which are written in this book.”
Moreover, that commandment only applies to the Book of Revelation.
Report Post »Eliasim
Posted on November 15, 2011 at 12:08pmTherefore how has man added unto the things written in the Book of Revelation? They applied the ending Commandment to the entire Bible, when it was only meant for the Book of Revelation.
Report Post »Eliasim
Posted on November 15, 2011 at 12:11pmAnd that’s why so many people are so lost, because not all of the books in the New Testament are fully accurate, and also people just don’t really think about the words they speak when they say “The Lord’s Prayer.”
Report Post »Eliasim
Posted on November 15, 2011 at 12:21pmTruly, if you do not become as a child and learn in a hungry searching fashion then the men who don’t will not acquire the Kingdom of Heaven.
Report Post »lukerw
Posted on November 15, 2011 at 12:51pmPrediction is a reasoned calculation, whereby men can alter the event (change the outcome); Prophecy is a Seeing by GOD, and can only be Fulfilled (must happen)!
Report Post »COFemale
Posted on November 15, 2011 at 12:00pmSo FHA can get rewarded for bad behavior, but I get no help? Isn’t that just peachy.
If I lose everything so should they. They got us into this mess through bad policies and greedy DEMOCRAT employee’s; they need to be disbanded and all the employee’s laid-off; given the same medicine they dished out. No more bailouts!
Report Post »elosogrande
Posted on November 15, 2011 at 11:41amEvery problem this country has can be traced back to government, whether local, state or federal. Politicians screw up everything they touch. Let these entities fail, and don’t bring them back.
Congress – drop the gavel and step away.
Report Post »Timothy_Reid
Posted on November 15, 2011 at 11:56amAnd a good amount of it to the “New Deal”. FDR was a piece…..
Report Post »762x51
Posted on November 15, 2011 at 11:40amLet’s see, how shall I say this? NO!
Another commie plan laid to rest, old FDR was was a filthy commie just like our current WH resident. Well maybe not quite as bad as Comrade Chairman Obama.
Report Post »Timothy_Reid
Posted on November 15, 2011 at 11:58amPardon me, I’m not politically correct……..but FDR was unable to use his legs, so he was only half as bad……
Report Post »lukerw
Posted on November 15, 2011 at 12:46pmEvil is Evil… and I don’t think Size Matters!
Report Post »Timothy_Reid
Posted on November 15, 2011 at 1:09pm@lukerw lol, no kidding look at Mini-me
Report Post »EqualJustice
Posted on November 15, 2011 at 11:40amHAHAHA THat Tea Party song comes to mind… “I NEED A BBBBAAAIIILLL OUT..” http://www.youtube.com/watch?v=vJVxbVoLb9c&feature=related
Report Post »CatB
Posted on November 15, 2011 at 12:10pmYes .. yes it does!
TEA!
Report Post »Unalienable Rights
Posted on November 15, 2011 at 11:35amThe market has to reset. Dismantle FHA, Fannie, and Freddie. It will not be easy for the citizens. Many will need to rent instead of buy. Many construction jobs will be lost. But we cannot continue to prop up housing prices with government programs. Politically, it would be less popular than reforming Social Security and Medicare, but it is the right thing to do.
Report Post »JLGunner
Posted on November 15, 2011 at 11:40amAfter fannie and freddie gave out huge bonuses, they came back asking for more bail out money. We’ve all gone mad.
Report Post »AvengerK
Posted on November 15, 2011 at 11:45amAnd not only a few days ago….useful idiots and lefty trolls TIFOSA and JZS were bleating that relaxed lending standards had nothing to do with the mortgage meltdown. JZS in his now all too familiar tunnel visioned posts demanded to know if the laws that led to the meltdown are still in place. I noted to him that Dodd/Frank in fact allows the FHA to give out loans for only 3.5% down. That in fact..the same unstable conditions for bad loans were still not addressed in the riduculous bill. VOILA! The FHA is facing insolvency along with Fannie and Freddie. No..I’m not expecting JZS or TIFOSA to acknowledge they were wrong. I’m expecting them to squirm in their chairs and silently curse their professors for robbing them of a credible education, then desperately clinging to their failed ideology by making excuses, distractions and deflections rather than admit the truth.
Report Post »MidWestMom
Posted on November 15, 2011 at 12:47pm@AvengerK
Considering their track record of ignoring threads where their “logic” is proved idiotic, I doubt we’ll see them on this one.
Report Post »smithclar3nc3
Posted on November 15, 2011 at 2:58pmActually housing would prices would drop without government subsities the people in homes would lose equity and be hurt the worst especially thos ewho kept barrowing on equity as it rose. After that the market would restructure to a functional level median home prices would be set by median income. Housing would pick up again and rent would drop.
Report Post »The most effed up part is this didn’t have to happen the market was already structured at a median income price prior to Government intrusion on housing. Redistribution never works as it they would like. It only serves to bring society down not raise it up.
lukerw
Posted on November 15, 2011 at 11:34amStop it…. Stop it… Stop it! Help… Rape!
Report Post »JLGunner
Posted on November 15, 2011 at 11:32amOk, so let the FHA sink. Who cares.
Report Post »mikem1969
Posted on November 15, 2011 at 11:38amAmen, let if fail. NO MORE STINKING BAIL OUTS.
Report Post »affinnity
Posted on November 17, 2011 at 11:02amThe liberals will never let the FHA close down. Liberal sustainable communities need this type of financing to change and continue to exist.
Report Post »piper60
Posted on November 15, 2011 at 11:27amAnother example of “too big to fail”. They’re letting this happen to give EVEN MORE power to freddie mack and fannie mae.
Report Post »