Guest Post: The Federal Housing Administration Saved the Housing Market

By John Griffith, Policy Analyst, Center for American Progress

For close to 80 years, the Federal Housing Administration has helped millions of working-class families achieve homeownership and promoted stability in the U.S. housing market – all at no cost to taxpayers. But in the wake of the worst housing crisis since the Depression, the agency is facing mounting losses on loans originated as the market was in a free-fall. Some observers speculate that FHA may soon require support from taxpayers for the first time in its history.

If that were to happen, any financial support to FHA would be a good investment for taxpayers. Without the agency’s support in recent years, the housing market downturn would have been much more drastic, home prices would have fallen further, households would have lost much more wealth, more families would have lost their homes to foreclosure, and our already sluggish economic recovery would be even slower.

This issue brief puts the agency’s current financial troubles in perspective. It explains the role that the Federal Housing Administration has had in our nascent housing recovery, provides a picture of where our economy would be today without it, and lays out the risks in the agency’s $1.1 trillion insurance portfolio.

Read more and download this issue brief here.