Rescue redux

26 September 2013 By Daniel Indiviglio

Fannie and Freddie are on the mend, but the Federal Housing Administration may need extra Treasury support. New U.S. capital for an agency that backstops home loans would coincide with the re-emergence of private guarantors. It’s a helpful reminder to remember past mistakes.

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The Federal Housing Administration will likely need to seek a cash infusion from the U.S. Treasury for the first time in its 80-year history, Reuters reported on Sept. 25, citing sources familiar with the matter.
The agency, which guarantees over $1 trillion in mortgages and backs 15 percent of all U.S. home loans, has seen deep losses that have eroded its capital base. It may seek at least $1 billion in federal dollars at the end of September to cover losses that exceed its reserves, according to the Wall Street Journal.

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