FHA’s balance sheet is currently in a precarious position, but CAP argues that the expansion of that balance sheet, which now totals $1.1 trillion, helped keep credit flowing since the collapse of the bubble. “Home prices would have plummeted even further, households would have lost much more wealth than they already did during the crisis, and even more families would have lost their homes to foreclosure,” the paper claims. CAP further alleges that FHA will not require a sustained injection of public funds to keep going (through a standing line of credit it holds with the US Treasury but has never tapped), as the mortgages it insured in recent years look to be profitable. And even if FHA did need to pull funds from the line of credit, that would represent a solid investment for taxpayers, given the support that FHA provided the economy.
|By: David Dayen Saturday October 13, 2012 12:00 pm|