A report last week in The Wall Street Journal said the Federal Housing Administration (FHA) might need a bailout amounting about $1B from the U.S. Treasury by the end of the month.
The FHA: a dwindling role?
The need for a fund infusion has been primarily caused by loan delinquencies, which appear to be underestimated by the FHA when drawing up profit estimates, and the inability of the agency to factor in the recent increase in housing values (a constraint of the budgeting process) into its profit estimates for the year. The budgeting, done last December, projects home prices and delinquencies as forecast then, but...
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