Post by bot on Sept 28, 2013 4:00:53 GMT -5
WASHINGTON (MarketWatch) -- The Federal Housing Administration expects to take about $1.7 billion from the U.S. Treasury Department to comply with rules saying that its reserves must be large enough to cover all projected losses over the next 30 years, officials said Friday. The FHA, which insures mortgages, has been strained by bad older mortgages and its reverse-mortgage portfolio. Earlier this year officials had estimated that FHA would need about $943 million. Since that time mortgage rates have increased, cutting demand for loans, and FHA has generated less revenue from insuring mortgages than officials had previously forecast. The forecast for the Treasury draw assumes that FHA stopped insuring new mortgages and current reserves had to be sufficient to cover all projected losses over the next three decades. FHA officials stressed that the agency has enough funding to pay out claims, and that delinquency and asset-recovery rates are improving. FHA will take the infusion on Monday.
