NEW YORK — An audit of the Federal Housing Administration is expected to show that its main mortgage insurance fund has been suffering losses at a rate that could run it dry in five months, it was reported today.
The findings will be contained in the first full audit of the 55-year-old agency, which insures $275-billion worth of U.S. home mortgages, the New York Times said.
It cited agency officials as saying the FHA was down to a five-month reserve, $2.8 billion, to cover holders of defaulted mortgages. When the reserve runs out, the Treasury must pick up the payments.
Claims on the main fund, the Mutual Mortgage Insurance Fund, amounted to $2.9 billion in 1986, $4.4 billion in 1988 and will hit an estimated $6.6 billion this year, according to budget documents cited in the report.
Economic downturns, particularly in the oil industry in the Southwest, plus fraud, mismanagement and a sluggish housing market contributed to the agency's problems, the newspaper said.