The Real Deal New York

FHA may need bailout if prices continue to fall

September 08, 2009 04:07PM

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Concerns are increasing that the Federal Housing Administration will need a bailout after taking on a larger role in the mortgage market this year. An ever larger number of homeowners with FHA backed loans — which require down payments as low as 3.5 percent — are at risk of defaulting, and these defaults could push the FHA’s reserves below the amount Congress requires. The reserve amounts will be revealed in an annual report to be released Sept. 30. New FHA Commissioner David Stevens said the agency is not in danger of needing a taxpayer bailout, but several housing analysts have said a FHA bailout could be necessary if housing prices continue to fall.

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