FHA Report Adds Fuel to Minibus Fire
A new actuarial report saying the Federal Housing Administration has a “close to 50 percent chance” of triggering an emergency cash influx from the Treasury Department is highlighting a debate in the minibus conference report about what size mortgage the federal government can insure.
The FHA received its independent actuarial findings, the bulk of the report it released today, on Oct. 12 — weeks before a final decision was made to increase the loan limits for the agency.
But the report was only released to Congress today, one day after the House and Senate appropriations panels issued their conference report in the minibus, which includes a provision that increases the size of a mortgage the FHA can insure to $729,750. Conferees left the so-called conforming loan limit on mortgages held by Fannie Mae and Freddie Mac as is, at $625,000.
Brian Sullivan, a spokesman for the Department of Housing and Urban Development, which houses the FHA, said the full report was delayed because it includes financial information through the fiscal year, which ended Sept. 30, as well as a report from the acting head of FHA about the findings.
“I can’t emphasize this point enough … this is a huge undertaking,” Sullivan said, adding that the FHA had no incentive to hide the findings in relation to whether the loan limits were raised in the minibus. When asked whether FHA was pushing the increase, Sullivan said, “absolutely not.” He added, “This is a debate that’s happening within the Congress.”
The FHA actuarial report says “the chance that future net losses on the current, outstanding portfolio could exceed current capital resources is close to 50 percent.” If losses exceeded capital resources, it would automatically trigger a “one-time transfer of monies” from the Treasury Department to bolster the FHA.
The Club for Growth, a conservative group known for backing primary opponents to moderate Republicans, slammed the decision to raise the loan limits in the minibus in light of the new report about the FHA and announced it would “key vote” a “no” on the minibus.
“Including higher FHA loan limits on the heels of this audit report is beyond ridiculous,” said Club for Growth President Chris Chocola. “One year ago, Americans sent a message that they wanted to end the subsidies and the bailouts that have crippled our economy. Raising the FHA loan limits again is a step in the exact opposite direction.”