WASHINGTON – The Federal Housing Administration, which propped up the collapsing housing market last year, acknowledged yesterday that it has drained its cash reserves to dangerously low levels, heightening concerns that it might need a taxpayer bailout.
The agency, which guarantees loans for many first-time homebuyers, could be hit if housing prices lose ground or if a new wave of mortgage defaults, triggered by double-digit unemployment, crashes into the market in the coming months.
If the FHA runs into financial trouble, it could make it more difficult for borrowers to get loans, particularly first-time buyers.