Bloomberg News

FHA Sees 50% Chance of Needing Aid, Premium Boost for Reserves

November 16, 2011

Nov. 15 (Bloomberg) -- Federal Housing Administration mortgage insurance reserves fell to their lowest level on record, failing to meet the legal minimum for the third year in a row, the agency said in a report to Congress.

There’s a 50 percent chance that the agency will need to raise premiums or will require a taxpayer subsidy because its net worth is near zero, the Washington-based FHA said in the report released today.

The capital ratio, a measure of the insurance fund’s ability to withstand losses, fell to 0.24 percent in the year ended Sept. 30, from 0.50 percent a year earlier and 3 percent in 2008, the agency said. The FHA is required to maintain a ratio of at least 2 percent.

To contact the reporter on this story: Clea Benson in Washington at cbenson20@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net


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