WASHINGTON (9/30/13)--The Federal Housing Administration (FHA) will need to borrow $1.7 billion in taxpayer funds from the U.S. Treasury to cover projected losses, the Obama Administration announced on Friday.
The funds are scheduled to be transferred today.
This total is nearly double the $943 million the agency said it may need to borrow earlier this year. The FHA has not required this type of appropriation from the Treasury in the past.
In a letter to the U.S. Congress, FHA Commissioner Carol Galante said the $1.7 billion total is higher than the Obama administration estimate "because of a decline in FHA endorsement volume in the last few months of the fiscal year--consistent with the trend in the broader housing market in response to higher interest rates."
Many in the U.S. Congress have called for serious reforms to the agency. Legislation that would strengthen the FHA and help ensure that agency's long-term solvency has been introduced this year, and the FHA itself earlier this year announced some of its own reforms that could help improve its financial condition and manage and protect its single-family insurance programs. The changes will also encourage the return of private capital to the housing market.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) on Friday noted that the FHA's $1.7 billion bailout amounts to 10% of the revenue that agency collected in this fiscal year. "The FHA is clearly headed toward financial disaster and taking taxpayers along for the ride. Unless Congress enacts sustainable housing finance reform, it's possible taxpayers will be forced to write blank bailout checks to the FHA indefinitely," he wrote.