2014 Budget Provides FHA a $943 Million Bailout

The Obama administration included a $943 million taxpayer bailout for the cash-strapped FHA in the 2014 budget-- the first bailout of the government’s mortgage insurer in its nearly 80-year history. According to the administration’s estimates, FHA has about $30 billion on hand but said its cash reserves would probably be swamped by souring loans.



FHA Commissioner Carol Galante said the agency may still might be able to avoid taking aid from the U.S. Treasury,.“FHA, while still under stress from legacy loans, has made significant progress and is on a sound fiscal path forward,” said Galante on a conference call with reporters. The agency has until Sept. 30 to determine if it needs a cash infusion.
According to the Obama administration, the 2014 budget:
 

Supports the Mortgage Market and Helps Borrowers Who are at Risk of Foreclosure. The Administration projects that the Federal Housing Administration (FHA) will insure $178 billion in mortgage loans in 2014, supporting new home purchases and refinanced mortgages that significantly reduce borrower payments. FHA financing was used for 27 percent of home purchase loans in 2011, including an estimated 41 percent of first-time homeowners. FHA’s loss mitigation program minimizes the risk of financially struggling borrowers going into foreclosure, and since the start of the mortgage crisis,it has helped more than a million homeowners. Recent increases in FHA premium levels will boost FHA’s capital reserves and increase Federal revenues. The Budget also includes $132 million for housing and homeowner counseling through HUD and the Neighborhood Reinvestment Corporation (NeighborWorks). Over half of these funds are dedicated to foreclosure assistance. NeighborWorks’ National Foreclosure Mitigation Counseling program has assisted over 1.4 million households since its inception in 2008.
 

Sources:
Fiscal Year 2014 Budget of the U.S. Government
Office of Management and Budget
April 11, 2014
 
Reuters
April 10, 2013
 
Politco
Jon Prior
April 11, 2013