COVER UP? Did the Foreclosure Fraud Settlement bailout FHFA

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COVER UP? Did the Foreclosure Fraud Settlement bailout FHFA?

COVER UP? Did the Foreclosure Fraud Settlement bailout FHFA?

As Neil Barofsky asked Nick Timiraos “So perhaps that’s why the settlement was announced before even a term sheet was hammered out? To cover up FHA budget hole“?

WSJ-

The Federal Housing Administration will exhaust its reserves over the coming year, according to budget projections released Monday, which would require a Treasury infusion for the first time in its 78-year history.

But Obama administration officials said more recent developments, including fines that will go to the FHA from last week’s $25 billion mortgage settlement with five major banks, could cover any shortfall and obviate the need for taxpayer funding.

The FHA has burned through its reserves over the past three years as defaults mount on loans it guaranteed as housing markets deteriorated. FHA-backed mortgages are an attractive option for borrowers because they can make down payments as low as 3.5%. But as home prices continue to fall, many of those borrowers have fallen underwater, where they owe more than their homes are worth and are at greater risk of default if they experience income shocks.

[WALL STREET JOURNAL]

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