On the same day that the Department of Housing and Urban Development reported that the Federal Housing Administration has lost almost all of its cash reserves, the House and Senate have agreed to raise the maximum loan limit on FHA loans.
The odds are 50/50 that FHA will need a bailout last year, according to an independent auditor’s report.
Joseph Gyourko, who is professor of real estate, finance, busienss and public policy at the University of Pennsylvania Wharton School, told CNBC that his research indicates that FHA losses have been underestimated by $50 billion. He says that FHA is “grossly under-capitalized.”