The Federal Housing Administration’s reserve fund has dropped below the federally mandated 2 percent ratio, down to .53 percent, according to an announcement made by officials this morning. The announcement comes on the heels of recent speculation among experts that the fund had long been growing unstable. If the reserves dip below zero, taxpayer money would automatically flow to help replenish the funds by way of the U.S. Treasury. Numerous foreclosures and consistently depressed home prices have been cited as two main causes for the agency’s fiscal woes. The bleak news has caused many to question the FHA’s current policies and to demand reforms. Edward Pinto, former chief credit officer for Fannie Mae, said that the FHA has overextended itself in the market and that a scaling back is necessary for the agency’s health. “FHA should have a limited role,” Pinto said. “It should not be 30 percent of the market.” [Washington Post] and

As condominium unit sales increase, developers are facing difficulties with the financing of end loans for individual buyers. A principal at the Hudson Companies, the developer of two new projects, Third and Bond in Carroll Gardens and Riverwalk Court in Roosevelt Island, said, “We are not having a problem with end loans for our buyers. Many financial institutions are in the market; nevertheless, unless a project has sales of 50 percent or more, [Federal Housing Administration] and Fannie Mae options are not available in these developments.” Significant changes to FHA condo financing, which are expected to take effect Dec. 7, could have serious ramifications for developers, condo associations, buyers and sellers. [more]