FHA will get cash infusion but outlook is good
The agency, which propped up the mortgage finance market during the financial crisis, is running a deficit in its reserve account because of bad mortgages from 2006 to 2008.
Under current law, the FHA is obligated to take the money it needs from the Treasury to shore up its reserve account.
{mosads}Congress does not need to approve the bailout.
Beyond that, it also must ensure that it has another 2 percent in capital reserves.
Once FHA’s ship is righted, Treasury can take back the money it borrowed and more, up to the exact amounts the agency needs in those two reserve accounts, Stevens said.
Stevens argues that the reserves were hit hard by a reverse mortgage program that has since been changed. He said that while the program represents a small percentage of the $1 trillion portfolio, it had an outsized effect on cash reserves.
This would be the first time since the agency was created in 1934 that it would need help from the federal government.
President Obama included $943 million infusion in his fiscal 2014 budget for the agency with the expectation that it would fall short of cash.
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