The Federal Housing Administration (FHA) failed to disclose an internal stress test that revealed the agency’s projected losses over 30 years could be up to $115 billion under severe economic conditions, a figure over $100 billion higher than the $13.5 billion projection the FHA included in its annual audit.
House Oversight and Government Reform Committee Chairman Rep. Darrell Issa (R-CA) sent a letter to FHA Commissioner Carol Galante asking why the FHA, which insures lenders against losses, chose not to report the “troubling” findings.
“We are reviewing this matter and will respond to the committee appropriately,” Department of Housing and Urban Development (HUD) spokesperson Addie Whisenant told the Wall Street Journal.
The FHA has floundered under the weight of mortgage delinquencies. Last November, the FHA announced it would raise mortgage-insurance premiums an average of $13 month for new borrowers. The last-ditch effort was meant to avoid a taxpayer-funded bailout, something that has never happened in the agency’s 79-year history.
Last year, one out of every four homes with negative equity (“underwater”) were borrowers with FHA-insured loans.