Federal Housing Administration

FHA Bailout Is Inevitable, But Taxpayer Pain Is Not

The Federal Housing Administration (FHA)’s 2012 audit confirmed what has been obvious for some time: FHA is deeply underwater, with a negative economic value of $34 billion. With over $1 trillion in mortgages backed by FHA, even minor changes in the housing market could add tens of billions to that total. A taxpayer bailout is inevitable.

FHA and the Foreclosures of Tomorrow

The recently released Federal Reserve White Paper on the Housing Market has received considerable attention, at least for its policy proposals.  I found one of the more interesting pieces of data in the paper to be the number of mortgages with negative equity, reproduced below (Figure 3 in the Fed paper).

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