Housing Urban Development’s Federal Housing Administration was created during the New Deal to rebuild confidence in the housing market. Today, it is the only federal agency to not rely on taxpayer dollars: its funding comes from borrowers who take out FHA-financed mortgages. However, the Washington Posts’ Dina ElBoghdady explains that FHA might need a taxpayer bailout. Due to the high number of borrowers who have defaulted on FHA loans, the agency has run out of money from its emergency fund, which is managed by the Treasury Dept. ElBoghdady reports that Treasury will continue to fund FHA, even if the agency goes in the red. Only now the money will come from taxpayers, not the reserve fund.

Will Congress scream and shout? Maybe not — ElBoghdady writes that “the agency’s complex funding mechanism is little understood in Washington, including on Capitol Hill.”

Comment RSS - You can skip to the end and leave a response. Pinging is currently not allowed.