The House Oversight Committee is pressing the Federal Housing Administration for more details on its financial picture after learning that the insurer's unfunded liability could potentially be nearly nine times higher than it previously disclosed.
A stress test found that the FHA's losses could be as high as $115 billion under "severe economic circumstances," according to a letter sent by Rep. Darrell Issa, R-Calif., chairman of the House Committee on Oversight and Government Reform, to the federal mortgage insurer late last month. The FHA had previously stated that the tests showed a potential liability of $13.5 billion.
The FHA may have withheld this information from Congress in order to "obfuscate" its real performance under the stress test for political reasons, Issa claims in the letter.
The May 29 letters from the House panel concern stress tests performed by Integrated Financial Engineering, an independent actuarial consultant, as part of the FHA's 2012 annual review. Issa says FHA Commissioner Carol Galante may have personally directed the consultant to delete the test results showing the largest potential losses. The committee has launched an investigation into the FHA's finances and requested that it turn over documents related to the stress tests by June 12.
The Obama Administration estimated last month that the FHA will need nearly $1 billion to close its funding gap this year.