Despite offering “promising signs” that the recovery of the housing market is underway, Secretary of Housing and Urban Development Shawn Donovan came under fire Thursday on Capitol Hill over the poor financial health of the Federal Housing Authority.
The beleaguered FHA has suffered billions of dollars in losses, which some fear may portend another bursting of the housing bubble or even the need for a taxpayer bailout. Lawmakers raised concern Thursday that the problem is spiraling out of control.
“This is now the fourth year in a row that the FHA fund has been below its statutory minimum capital levels,” ranking member of the Senate Banking Committee Sen. Richard Shelby, R-Ala., told Donovan. “Yet each year, we are told that this is a temporary dip and that within a few years, everything will be fine.”
That’s right kids. The FHA, the Lindsay Lohan of federal agencies, is still making bad loans and driving foreclosures. Old habits die hard.