WASHINGTON — The Federal Housing Administration helped stabilize the real estate market after the subprime bubble and lay the groundwork for the recovery — and now the bill for taxpayers might be coming due.
The Obama administration's proposed budget projects the agency, which insures more than $1 trillion in mortgages and is a large presence in the Memphis housing market, would need a $943 million bailout this year to stabilize its shaky long-term finances. It would be the first time the FHA, which is financed by the premiums it charges homeowners, has needed taxpayer funds in its 79-year history.
"If the FHA were a private financial institution, likely somebody would be fired, somebody would be fined, or the institution would find itself in receivership," said House Financial Services Committee chairman Jeb Hensarling, R-Texas, who has been warning that the agency was overextending itself to boost the housing market. "Instead, the FHA is merrily on its way to becoming the recipient of the next great taxpayer bailout. It's outrageous."