Bloomberg Speculates That FHA Will Need Treasury Draw

Posted by Orb Staff on November 06, 2012 No Comments
Categories : Residential Mortgage

12697_01harp Bloomberg Speculates That FHA Will Need Treasury Draw A news article published by Bloomberg News is raising speculation that the Federal Housing Administration (FHA) may be forced to request its first-ever draw from the U.S. Department of the Treasury.

Bloomberg News, citing sources that declined to be identified in print, reports that the extent of the FHA's financial state will become clear when the agency submits its annual report to Congress next week. The report, which is based on analysis by an outside actuary, would detail whether the FHA can continue operating without financial assistance from the Treasury.

FHA-backed loans currently comprise 15% of U.S. residential mortgages, and the agency insures about 7.6 million loans with total outstanding balances near $1.1 trillion – which is three times the amount it backed in 2007. However, continuing defaults from loans made from 2005 to 2008 have created a strain on the agency. More than 17% of all FHA loans were delinquent in September, according to Bloomberg data.

Bloomberg News also notes that the FHA avoided requesting a Treasury draw this year thanks to a one-time payment of almost $1 billion from a legal settlement regarding questionable foreclosure practices by leading servicing companies.

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