Federal Housing Administration

The Federal Housing Administration (FHA)

FHA is the oldest of the federal housing agencies. As mortgage financing has dried up in the financial crisis, the FHA stepped into the gap and become the main source of financing for buyers who can't make a big down payment or who want to refinance but have little equity. FHA provides home mortgage insurance to lenders; if the borrower should fail to make payments and goes into foreclosure, FHA will insure the lender against most of its losses. In contrast to previous history, FHA’s net position has deteriorated rapidly since the financial crisis began in 2007 while its outstanding guarantees are rising rapidly. Rising mortgage defaults could force the Federal Housing Administration to seek a taxpayer bailout to keep it capitalized.

Funding agency and aid type
Mortgage insurance to cover bank losses.

Who benefits
Borrowers and mortgage lenders.

Banks. Injections of funds to keep them afloat.

Related SourceWatch articles

 * SIGTARP Quarterly Report to Congress July 21, 2009
 * Troubled Asset Relief Program