House letter could spark severe FHA reform debate

Julie C. Nichols General – Christina Mlynksi

A House Oversight and Government Reform Committee letter to the Federal Housing Administration questioning the possibility of future losses in times of severe distress is likely to reignite the FHA reform debate on Capitol Hill, analysts claim. The letter was sent to FHA Commissioner Carol Galante, regarding a previously unreleased estimate of the FHA’s solvency under a worst-case scenario. If a worst-case scenario were to occur, the FHA would suffer $115 billion of losses over the next 30 years, based on the unreleased estimate. The results were not included in the agency’s actuarial analysis and the letter contends that the "FHA was determined to avoid disclosing the magnitude of the FHA’s capital inadequacy."

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