Mercury Rising 鳯女

Politics, life, and other things that matter

FHA to join Fannie and Freddie in conservatorship

Posted by Charles II on November 15, 2012

According to Bill McBride, the Federal Housing Authority is fundamentally insolvent, and will require a $16B bailout. This is based on a HUD report which has been taken down, perhaps due to early release, and reported in the Wall Street Journal.

This isn’t entirely unexpected. I mentioned the FHA as a possible casualty in January 2010. But this is going to substantially complicate the problem of reaching a fiscal deal, since it will have to be factored in in the middle of the craziness in Washington.

However, this is only notional insolvency, based on model projections and not a sum that has to be paid out, cash-on-the-barrel. Apparently the fact that house prices have stopped falling while foreclosures continue and interest rates continue to fall reduced the projected revenue stream enough to turn what looked like a surplus into a deficit. Expect Darrell Issa and John McCain to demand a Watergate-style commission. Back in Realityville, expect the taxpayers to have to pony up a couple of billion a year for the FHA to continue operations.
In the course of looking up the history, I am reminded of Bill McBride’s co-blogger Tanta (Doris Dungey), who died very young almost four years ago. Wherever you are, Tanta,


One Response to “FHA to join Fannie and Freddie in conservatorship”

  1. I remember Tanta — she was one of the first of the reality-based bloggers to get noticed by the corporate media.

Sorry, the comment form is closed at this time.

%d bloggers like this: