We fell short of our Fall Fundraiser goal of 2,500 donations. Help us catch up ⏩ Give Now
Marketplace Whiteboard®

FHA: The next government housing bailout?

Ethan Lindsey Sep 25, 2013

Reuters is reporting that the Federal Housing Administration will need emergency help — in the form of a cash bailout — from the U.S. Treasury Department, for the first time in its history.

According to Reuters:

The agency, which offers private mortgage lenders guarantees against homeowner default, has nearly exhausted its reserves for the mortgages it backs, making it necessary for the government agency to turn to the Treasury Department for a cash injection.

The FHA has never needed to tap the Treasury before because it has been able to take other actions, including raising insurance premiums, to stay solvent.

The White House projected in April that the FHA would face a shortfall of $943 million for the fiscal year that ends on Monday, but the agency said it would wait until the end of the budget year to make a final decision on whether to draw Treasury aid.

To better understand how the FHA works and why it may need a bailout, check out Paddy Hirsch’s Whiteboard on the topic.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.