The House Financial Services Committee discussed the condition of the Federal Housing Administration (FHA) Single Family Insurance Fund. The FHA insures almost 40% percent of new home mortgages.
An audit of the FHA released on November 15 said that the agency may need a taxpayer-funded bailout next year if the housing market continues to deteriorate. The report found the FHA has just $2.6 billion in cash reserves, down from $4.7 billion last year.
Housing and Urban Development Secretary Shaun Donovan testified at the hearing - the FHA is part of his department.
The FHA provides mortgage insurance on loans made by approved lenders, and insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.