WASHINGTON (AP) - A federal agency that
insures mortgages for millions of low- and middle-income borrowers is
facing losses of $16.3 billion and may require taxpayer support,
according to an independent audit released Friday.
The Federal Housing
Administration's estimated losses were steeper than earlier projections.
That shows high numbers of mortgage defaults triggered by the housing
crisis have reduced the FHA's reserve funds.
The Department of Housing
and Urban Development, which oversees the FHA, stressed the agency has
sufficient cash to pay insurance claims against mortgage defaults.
Still, HUD said the Obama
administration will consider seeking taxpayer assistance for the agency.
That will be decided early next year when the administration puts
together its budget request for fiscal 2014.
The FHA has taken steps to
shore up its reserves over the next few years, HUD said in a news
release accompanying the audit. Among them: Expanding so-called short
sales - when a home sells for less than what is owed on the mortgage -
and raising annual insurance premiums paid by FHA borrowers by an
average of $13 a month.
Lower mortgages rates
contributed the FHA's bleaker financial situation, HUD said. When people
refinances at lower rates, it reduced revenue earned from loans.
The FHA insures about $1
trillion in home loans. The FHA and government-controlled Fannie Mae and
Freddie Mac together back around 90 percent of new mortgages. Fannie
and Freddie were bailed out by the government in 2008 during the
financial crisis and have cost taxpayers about $170 billion,
Sen. Tim Johnson, chairman
of the Senate Banking Committee, said he was "deeply concerned" by the
audit. The South Dakota Democrat said he will ask HUD Secretary Shaun
Donovan at a hearing about what actions are needed to shore up the FHA's
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