no_such_reality wrote:”The

[livinincali]

[quote=no_such_reality]“The FHA is required to maintain enough cash reserves to cover losses on the mortgages it insures. But in its annual actuarial report to Congress, the agency said a slower-than-anticipated housing market recovery has led its reserves to fall $16.3 billion below anticipated losses.

The FHA’s cash reserves aren’t supposed to drop below 2% of projected losses. They ended the 2012 fiscal year at -1.44%, down from the seriously low level of 0.24% at the end of 2011.”

So $16.3 billion in represents 1.68% of anticipated loses? That would mean anticipated losses are basically $1 Trillion.

“SAN FRANCISCO (MarketWatch) — The Federal Housing Administration has exhausted its capital reserves and is currently running at a deficit of $13.5 billion, The Wall Street Journal reported late Thursday, citing an independent audit. The FHA, which is expected to release the audit on Friday, is the arm of the Department of Housing and Urban Development that insures home mortgages. The audit is expected to show the FHA’s reserves were not enough to cover losses on $1.1 trillion in guaranteed loans, and that the agency will need taxpayer funding for the first time in 78 years, according to the Journal.”

Is that poor writing? Between the two of them do we conclude they’re hold a trillion dollars of loans that are bad?[/quote]

From a slightly different perspective the FHA has a default rate of about 9-10% right now. If the FHA has 1 trillion in guaranteed loans, then you’re probably looking at 100 billion in potential losses. The odd thing about FHA defaults is we should see those in default foreclosed through HUD but there’s nothing coming out of HUD. Is the government just going to let people squat without paying and artificially reduce inventory? You bet. Good luck seeing any foreclosure inventory in the future. The government/FHA controls whether or not it will happen directly.