Federal Housing Administration Could be the Next Housing Bailout

A weak housing market and economy could mean more trouble for the government's mortgage insurer.

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The truth is probably somewhere in the middle, most experts say. While FHA might be severely undercapitalized for the size of its liabilities, the losses the agency would have to sustain to go under would be massive.

"Yes, there is such a scenario, but frankly for that to happen the market would have to crash so badly, we would have other things to worry about than bailing out the FHA," says Tom Geurts, visiting associate professor of real estate and finance at the George Washington University in Washington, D.C. "[Gyourko] is right, but the scenario he paints is too bleak."


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