Two years ago, in November 2009, we warned you that U.S. taxpayers would likely have to bail out yet another big government housing agency, and it wasn’t Fannie Mae or Freddie Mac.
We said it was the Federal Housing Administration, which sells lenders a 100% guarantee against defaults on home mortgages typically for lower income people. FHA has seen defaults skyrocket on these loans.
But the Federal Housing Administration fought us vigorously on our story. So did liberal economic research groups.
Turns out they were wrong.
As the FHA is now set to soon release its annual report, the University of Pennsylvania’s Wharton School estimates that the FHA faces around $50 billion in losses in coming years.
Last year, economists from New York University and the New York Federal Reserve also warned the government agency would need a taxpayer bailout.
Back in 2009, we found FHA only had a “teacup” of money against a flood of potentially bad loans out of the seven million it insures.