FHA Sets Stage for Taxpayer Subsidy With $16.3 Billion Deficit

The Federal Housing Administration is projecting a $16.3 billion deficit in its insurance fund for fiscal year 2012, setting the stage for the first subsidy from Treasury in the agency’s 78-year history, the agency said in a statement.

“This does not mean FHA has insufficient cash to pay insurance claims, a current operating deficit, or will need to immediately draw funds from the Treasury,” the FHA said in the e-mailed statement.

The agency is set to release its annual actuarial report tomorrow. Under the most pessimistic scenario in the report, the value of the fund could remain negative until fiscal year 2019.

To contact the reporter on this story: Clea Benson in Washington at cbenson20@bloomberg.net

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net

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