Tuesday, July 26, 2011

Oh, Good. ANOTHER Housing Bailout: FHA

Long story short, FHA's accounting methodology is ....ahhh.......not so good.

...At the request of Representative Paul Ryan, a Republican from Wisconsin, the Congressional Budget Office recently took the official budget estimate for new FHA loans and added in the cost of market risk that taxpayers bear in guaranteeing the mortgages.

Under this more comprehensive methodology, the CBO determined that FHA loans would swing to a loss of $3.5 billion from a projected profit of $4.4 billion next year. In a 10-year budget window, this could mean a difference of $50 billion to $70 billion, depending on market conditions.

So Fan/Fred are in the tank for $160Bn (so far), and FHA may be next.


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