Federal Housing Administration May Need Bailout

The Federal Housing Administration’s cash reserves have fallen to a level that indicates that there is a 50% chance the agency could run out of money and require a taxpayer bailout in the next year. The FHA’s situation underscores one of the hidden costs of the U.S. government’s extraordinary efforts to rescue the housing market. In the past four years, as private lenders have pulled back from the mortgage market, the FHA’s market share has swollen. It backed one third of mortgages used to finance home purchases last year, up from around 5% in 2006. The FHA doesn’t make loans but insures lenders against defaults on mortgages that meet its standards.

Wall Street Journal  November 15, 2011