The FHA's nose dive: Another housing agency takes taxpayers for a dangerous ride

The Washington Post reports:

THE COST of the housing bailout continues to rise. The government-run mortgage giant Fannie Mae requested another $15 billion from the Treasury this month, to help cover a loss of $19.8 billion in the third quarter. That brings the total tab for rescuing Fannie to $60 billion so far. Fannie's twin, Freddie Mac, has received $51 billion. And now comes news that the capital reserves of the Federal Housing Administration (FHA) have fallen to $3.6 billion, which is just one-half of 1 percent of the $685 billion in loans insured by the agency and well below the statutory minimum of 2 percent.

Does this mean that Congress will soon be shoveling more billions into the FHA? Possibly. But it's important to understand the precise nature of the FHA's predicament. Whereas Fannie and Freddie are in the business of securitizing mortgages, the FHA insures them directly. Borrowers of modest means can get houses with as little as 3.5 percent down; if they default, the FHA pays off the lender from accumulated insurance premiums.

Uncle Sam , the leverage man.