The Real Deal Miami

FHA reserve fund reaching precariously low levels

November 10, 2009 02:00PM

The Federal Housing Administration has seen its reserve fund dip to a seven-year low, according to the Washington Post, based on a review of the organization’s finances. The organization’s reserve levels were at $10.04 billion as of June 30, approximately half the level seen seven years ago. If the situation doesn’t reverse itself soon, FHA could gain a de facto government bailout not regulated by Congress. “It is absolutely a myth that they would have to go to Congress for money,” Marvin Phaup, a budget expert at Pew Charitable Trusts, said. “The FHA has permanent authority to get money from the Treasury because it is backed by the full faith and credit of the federal government.” If the FHA’s emergency reserve funds dropped below 2 percent of all outstanding FHA loans, the federal government would be required to intervene.