The FHA is insolvent … but that is nothing new
The FHA is insolvent … but that is nothing new. And why again, is that OK with everyone? This article is a clear indication that while the housing market does appear to be improving – it is a far cry from being safe and secure.
“This month, the FHA’s private GAAP-estimated net worth deteriorated by $400 million. The estimate for January of the FHA’s GAAP net worth is –$26.10 billion, down from –$25.70 billion in December 2013 (revised), up from –$28.40 billion in January 2013, and up from –$26.91 billion in January 2012. It is noteworthy that the FHA has shown virtually no improvement in its GAAP net worth since January 2012. The capital shortfall stands at $46 billion (using a 2 percent capital ratio) and $53 billion (using a 4 percent capital ratio adjusted to 2.7 percent based on expected recoveries). The Denial Dial was reset to −2.38 percent.”
For the full article from Ed Pinto with AEI’s International Center on Housing Risk, click here.