According to The Wall Street Journal, the Federal Housing Administration will require an infusion from the Treasury of at least $1 billion at the end of the month. While this is not a surprise to most people, there are still three takeaways on the FHA’s state of affairs.
Loan performance is improving.
Just not fast enough, apparently, to make up for losses sustained earlier in the cycle. Officials have said that nearly $70 billion in losses are due to loans issued between 2007 and 2009.
The housing market is also getting better.
The FHA’s financials are tied heavily to home prices. Home prices, after all, are a major driver in determining how much a lender or loan insurer loses when a loan defaults and goes through foreclosure.
The FHA is losing market share.
The New Deal-era agency has backed as many as one third of new loans for owner-occupant buyers in recent years, and housing officials have repeatedly said they don’t want the FHA to play as large a role in the market.
