Battered by defaults on loans it insures, the Federal Housing Administration is expected to tap the Treasury Department for $1 billion to $1.5 billion to plug a budget shortfall, according to three people familiar with the agency's finances.

The FHA is expected to ask for the funds at the end of the month, the sources said. If it does, it would be the first time in its 79-year history that the agency needed a bailout from the Treasury.

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