Monday
Jan072013
FHA Bailout Is Inevitable, But Taxpayer Pain Is Not
Monday, January 7, 2013 at 12:58AM
The Federal Housing Administration (FHA)'s 2012 audit confirmed what has been obvious for some time: FHA is deeply underwater, with a negative economic value of $34 billion.
With over $1 trillion in mortgages backed by FHA, even minor changes in the housing market could add tens of billions to that total. A taxpayer bailout is inevitable.
What isn't inevitable is the size of that bailout. FHA has been sunk not by a housing bust, but by policy choices. Better choices can reduce the size of the hole.
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