F.H.A. DELINQUENCIES RISE

WALL STREET JOURNAL: The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout . . . "They're probably going to need a bailout at some point because they're making loans in a riskier environment," says Edward Pinto, a mortgage-industry consultant and former chief credit officer at Fannie Mae. "I've never seen an entity successfully outrun a situation like this." . . . READ MORE

AGENCY NEEDS TAXPAYER BAILOUT?
BUSINESS INSIDER: The FHA has played a key role in the government's attempts to stabilize the housing market. . . . FHA-backed loans outstanding, which totaled $429 billion in fiscal 2008, are projected to hit $627 billion this year. FHA market share rose from 2.7% in 2006 to 23% last quarter . . . Until last year FHA guaranteed down payment assistance programs that basically let borrowers buy houses with no money down. Many of those borrowers soon had negative equity in their homes when housing prices dropped . . . READ MORE

DAILY FINANCE: That low down-payment rate was a recipe for disaster as home prices continued to fall. Many people who took FHA loans in the last three years could be facing underwater mortgages because home prices have fallen more than 3.5 percent. As job losses continue to mount, why would someone facing economic difficulties try to keep a home that is worth less than the money owed on it? . . . READ MORE

INVESTORS BUSINESS DAILY: FHA-insured loans have more than tripled from 530,000 in fiscal year 2007 to 1.7 million thus far in 2009. The Government National Mortgage Association, which securitizes FHA loans, has boosted its mortgage-related issuance to $287 billion from $85 billion. Yet during that same period, the FHA's loan delinquency rate has climbed to 14.4% in Q2 from 12.6% two years earlier . . . READ MORE

COMMENTARY/MARKET WATCH
FEDS ADOPT COUNTRYWIDE MODEL
REX NUTTING: An anonymous senior official . . . told the Journal that there was "no risk" that Congress would have to bail out the FHA. Yes, and there was no risk that housing prices would ever fall, no risk that Bear Stearns would collapse, no risk the subprime mess would spread around the world, no risk that AIG would ever have to pay off its credit default swaps -- and no risk that homeowners with no equity would walk away from their mortgage. Angelo Mozilo, former CEO of Countrywide Financial, would be proud to know his legacy lives on. . . . READ MORE

COMMENTARY/THE MODERATE VOICE
ANOTHER GOVERNMENT DISASTER
MIKKEL FISHMAN: Whether it’s Fannie/Freddie or the FHA/FDIC, it is becoming increasingly clear that when the government tries to have its cake and eat it too, things don’t work . . . READ MORE