Mortgage Insurance FHA Continues To Lose Cash Reserves

Board of Directors of mortgage insurance 'is becoming dangerously close to the farm is not too much cash for credit losses.

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Annually independent actuarial reserves is the loss of FHA loans to 0.24% of its U.S. $ 1.1 billion in insured mortgages.

FHA, which does not originate loans, but to reassure them, have gone to less than 5% share of the top of the housing boom is now over 30 percent. The auditor measures the FHA evaluating reserves for future losses, and is expected to continue to grow as housing prices fall and mortgage delinquencies still run very high.

FHA reserves are estimated at $ 2.6 billion as on September 30, the report said, down 45% from $ 4.7 billion last year. Congress mandates that the reserves of the FHA must be at least 2% of the total insurance in force, but it was not at that level for some years now. ECA estimates will not be back above that level until 2014, and it would be based on the current book of business.



"The credit quality of borrowers FHA in 2011 set a new record with an average credit score above 700 for the first time," said Carol Galante FHA Acting Director with a conversation with journalists.

Yet, if house prices continue to fall, the FHA would require government support in the form of saving.

The report uses as a base case of Moody Analytics, indicating a decline in housing prices in 2011 of 5.6% and low rates of growth of 1.3% in 2012.

Other analysts have predicted a fall in prices in 2012, or at least flat with zero growth. I always tell the independent auditors projections suggest that the prices of other, lower nationally in 2012 would have to compete with those of 2011, before the first level of support is insufficient. "

FHA, however, to look more at risk because of this week with lawmakers return to vote more than FHA loan limits and not just Fannie Mae and Freddie Mac limit of 600 counties fell on October 1.

"This is the situation that never happened before, so it is very difficult for us to make any prediction about the amount of activity over time will find the FHA compared to other private alternatives," Galante said. "We can implement premium increases if the economic situation is worse than it is today," he said.