P.M. Briefing : Losses Sap FHA Insurance Fund
An audit of the Federal Housing Administration is expected to show that its main mortgage insurance fund has been suffering losses at a rate that could run it dry in five months, it was reported today.
The findings will be contained in the first full audit of the 55-year-old agency, which insures $275-billion worth of U.S. home mortgages, the New York Times said.
It cited agency officials as saying the FHA was down to a five-month reserve, $2.8 billion, to cover holders of defaulted mortgages. When the reserve runs out, the Treasury must pick up the payments.
Claims on the main fund, the Mutual Mortgage Insurance Fund, amounted to $2.9 billion in 1986, $4.4 billion in 1988 and will hit an estimated $6.6 billion this year, according to budget documents cited in the report.
Economic downturns, particularly in the oil industry in the Southwest, plus fraud, mismanagement and a sluggish housing market contributed to the agency’s problems, the newspaper said.
Start your day right
Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week.
You may occasionally receive promotional content from the Los Angeles Times.
