Mortgage Defaults Cause $4.6 Billion Loss for F.H.A.
- Jun 10, 2008
Washington, D.C.–The Federal Housing Administration announced $4.6 billion in losses Monday due to high home loan default rates, the New York Times reports.The F.H.A.’s seller-financed down payment mortgage plan–which has been hurt in recent years by rising foreclosure and delinquency rates–is partly to blame, according to commissioner Brian D. Montgomery.Weak traditional mortgage portfolio performance and poor economic conditions also contributed to the predicted deficit, which is the largest amount the F.H.A. will have lost since 2004.To make up for the costs, the agency withdrew $4.6 billion from its $21 billion capital reserve fund. The F.H.A. did not ask Congress for money to stay solvent. However, the loss has caused some to worry that the agency may not be able to handle the proposed homeowner rescue plan, designed to help borrowers avoid foreclosure by refinancing into government-backed loans, the Times said.