Is the FHA Next in Line?

The NY Times reports that a third government mortgage agency, the Federal Housing Administration (FHA), is facing the prospect of crashing without a bailout -- thanks to the ongoing housing crisis around the country.

According to FHA commissioner David Stevens, who testified to Congress just one week ago, "absolutely no bailout will be necessary."

But the numbers are grim: as many 24% of loans from 2007 and 20% of loans from last year are in trouble, some of them facing foreclosure.

It may be only months before another taxpayer bailout will become necessary according to pundits on Wall Street and congresspeople on the Hill.

Meanwhile, FHA-insured mortgages are increasing.The FHA now insures about 5.3 million mortgages, up from about 4 million just three years ago.

Henry Harrison, October 15, 2009