Categorized | Finance and Mortgage

FHA May Need Massive Bailout

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Although the housing market is finally starting to show some signs of improvement, some government officials are now warning that another bailout with the real estate industry may soon be necessary.

Various republican government officials in the United States have reason to believe that the Federal Housing Administration, the entity that insures nearly a third of home loans in the United States, will likely require a bailout of billions of dollars in the near future if there is not a significant improve in the property market. These individuals believe that the FHA is following the same path as Freddie Mac and Fannie Mae, and that their role in the current market is not sustainable.

The officials have gone on record saying that had the FHA been a private-sector business, it would have gone bankrupt long ago. While some public officials are dismissing the claims as being pure politics, others are now seriously looking into the validity of the matter and the potential consequences that could ensue if such claims are true.

The FHA most recently increased the size of the loan limits that it will insure. Various political officials adamantly opposed the move, as they believe that the private sector should be taking a more expansive role in the insuring of property loans. These officials cited a report that indicates that the FHA has a fifty percent chance of failing in the next year if there continues to be minimal or no improvement in the housing market.

The possibility of another bailout will not be welcomed by most, as it will require more taxpayer funds being diverted to saving a massive real estate entity.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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