Despite efforts to shore up capital by raising fees, the cash-strapped agency may need a bailout totaling up to $1 billion before the end of the year, members of the House Committee on Oversight and Government Reform learned on Tuesday.
In addition the FHA – which has not required taxpayer support in its 79-year history – is being accused of hiding information contained in an audit conducted last fall showing that, should the housing market implode again, it could incur losses as high as $115 billion over a 30-year period, according to a Reuters report.
The ‘stress test,’ which was apparently omitted from the government mortgage-insurance agency's independent actuarial review, shows that should there be another housing meltdown, its projected losses over 30 years would exceed its reserves by $13.5 billion.
The FHA is required to maintain enough cash to pay for projected losses on all loans it insures.
A report from the White House's budget office released in April shows that the agency could require up to $943 million this year, due to losses in its reverse-mortgage program.
On Tuesday Republican U.S. Congressman Darrell Issa, who chairs the House Committee on Oversight and Government Reform, said he had received emails showing that FHA officials had decided not to include the ‘worst case scenario’ figures in its audit, due to fears over harsh reaction from government officials.
‘The documents obtained by the committee appear to suggest that … political factors may have influenced the removal of the Fed's (stress test) results from the final actuarial report,’ Issa reportedly wrote in a letter to FHA Commissioner Carol Galante dated May 29. The letter was first disclosed by the Wall Street Journal on Tuesday.
The U.S. Department of Housing and Urban Development, which oversees the FHA, is reportedly reviewing the matter.