Will the FHA Need a Bailout?

The Federal Housing Administration may require bailout money from the federal government to stay afloat, media outlets are reporting. The FHA insures mortgage lenders against losses.

A high number of mortgage delinquencies is at blame, according to sources.

“The FHA insured nearly 739,000 loans that were 90 days or more past due or in foreclosure at the end of September, an increase of more than 100,000 loans from one year ago,” The Wall Street Journal reports. “That represents around 9.6 percent of its $1.08 trillion in mortgage guarantees.”

The FHA is expected to report later this week that it has run through its reserves and will require a government bailout, The Wall Street Journal reports. If this takes place, it would be the first time that the FHA has ever needed a government bailout.

Regardless, the government would not decide whether to grant FHA a bailout and for how much until February.

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