FHA to draw $1.7b from Treasury to cover losses – GoUpstate.com
A federal housing agency said Friday it needs a $1.7 billion bailout from the Treasury to cover projected losses in a mortgage programs for seniors.
At issue are reverse mortgage programs, which allow seniors to borrow against their homes for everyday living expenses.
Reverse mortgage borrowers, who must be 62 or older, can take lump-sum or monthly payments. They still must pay property taxes and insurance. Sale proceeds from a home go to the lender when the borrower dies or moves out.
The FHA suffered big losses when many borrowers took large payments up-front and later ran into financial problems, often due to falling home values during the financial crisis.
The agency has sufficient cash to pay insurance claims against mortgage defaults, Galante said, citing more than $30 billion in cash and investments on hand, Galante said.
The cash infusion from the Treasury is about twice as much as the Obama administration projected would be needed in April. Obama’s fiscal 2014 budget request said the FHA would probably need $942 million.
There’s much to be taken from this account.
The reverse mortgage industry is one where the people living in the home have nothing to lose. The banks have nothing to lose. The taxpayers are on the hook for the loses that are incurred.
The Obama Administration planned for the program to lose money. They were off – needing twice as much to cover their losses.
Interesting that with almost $17 trillion in debt, the FHA has $30 billion in cash and investments on hand. What other agencies has cash on hand?
So much of this is questionable at best.