Federal Housing Administration officials denied reports showing the agency would face mounting losses and eventually require a taxpayer bailout, the Wall Street Journal reported, and said it continues to generate more revenue than expenses.

The FHA said it would have $2.6 billion in reserves even after taking into account expected losses on the $1.1 trillion of mortgages it guarantees, assuming housing prices fall 5.6 percent next year and then begin to rise. Once those prices rise, the FHA believes it will be able to replenish its reserve funds very quickly. … [more]

As the Federal Housing Administration prepares to release its annual financial report next week, there’s growing concern that the agency could run out of money and seek a taxpayer bailout for the first time ever.

The Wall Street Journal cited a report by University of Pennsylvania professor Joseph Gyourko that estimated the agency stands to lose $50 billion in the coming years because of the larger role it has taken in mortgage loan originations since the housing bust. Gyourko said the FHA is underestimating the potential impact of prolonged high unemployment and fallout from the homebuyer’s tax credit in its internal calculations. … [more]