The Federal Housing Administration released an audit last week showing that its cash reserves had seriously declined because so many borrowers have defaulted on their mortgages.
The audit showed reserves to be 0.53 percent of the total portfolio, significantly below the 2 percent minimum mandated by Congress. The agency announced plans to tighten its credit rating standards so it wouldn’t be a drain on taxpayers, but officials warned that if the drain worsens, the agency might fail, leaving taxpayers to clean up the mess.
Critics of the agency, which last year guaranteed about 30 percent of new loans, say it should tighten its standards further, including increasing down payments to 10 percent.
Source: The New York Times
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