WASHINGTON — The Obama administration is estimating that the Federal Housing Administration will likely require almost $1 billion in additional funding from the Treasury Department to shore up its capital reserves later this year.
The FHA has been struggling to meet its capital requirement for some time due to losses during the financial crisis. If the $943 million funding transfer goes through it will be the first bailout in the agency's 79-year history. The agency has until the end of the fiscal year, Sept. 30, to decide whether it needs to accept the funds.
Congress is also working on additional FHA reforms. Republicans have largely been critical of the agency's financial state and its continued dominance in the housing market, along with government-sponsored enterprises Fannie Mae and Freddie Mac.
"Since 2009, administration officials have repeatedly assured Congress and the American people that FHA was healthy and on a sustainable financial footing. The facts, however, as even the president's own budget now confirms, prove otherwise," said Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee and a vocal agency critic. "By attempting to be all things to all borrowers, the Obama administration has abandoned FHA's historical mission, it has endangered the future operations of the agency, and it has put taxpayers at risk for another Washington bailout."