“WASHINGTON, April 8 (Reuters) – The cash-strapped Federal Housing Administration will likely require a $943 million taxpayer bailout to cover expected losses from loans it insured as the U.S. housing bubble was deflating, the Obama administration said on Wednesday.
It would be the first bailout of the government’s mortgage insurer in its nearly 80-year history.
The FHA, which has struggled to manage a glut of delinquent mortgages, will likely need the funds given a shortfall in its reserves, the administration said in President Barack Obama’s fiscal 2014 budget proposal.
FHA Commissioner Carol Galante said the agency might still be able to avoid taking aid from the U.S. Treasury despite the projected budget hole. The agency has until Sept. 30 to decide whether it needs a cash infusion.
“FHA, while still under stress from legacy loans, has made significant progress and is on a sound fiscal path forward,” Galante told reporters on a conference call. “We are continuing to act and do everything possible to ensure that the impact of these legacy loans … are corrected as soon as possible.” …”Comments »