Concern Rises for Federal Housing Administration

Concerns are rising that the Federal Housing Administration could run out money if the economy doesn't recover soon, raising the risk the agency would seek a taxpayer bailout for the first time in its 77-year history... as the FHA prepares to release its annual financial report next week, a forthcoming study by Joseph Gyourko, a real estate and finance professor at the University of Pennsylvania's Wharton School, estimates that the FHA faces around $50 billion in losses in the coming years...

Mr. Gyourko says the agency is underestimating by billions of dollars the future losses related to borrowers who used an $8,000 federal tax credit to fund their down payment. The paper also says the FHA is underestimating default risk related to unemployment.