The Federal Housing Administration abruptly delayed the release of a long-awaited independent audit of the financial soundness of the agency, citing potential problems with the accuracy of some of the study's economic models. These, of course, are not to be confused with the unreliable models that ruined the marriages of John Derek and Mick Jagger. The FHA has long been a subject of my blog. The FHA provides aggressive loan to value ratios for home-buyers, the likes of which have not been seen since before Lehman Brothers collapsed. The gimmicky $8,000 homebuyer tax credit, combined with easy FHA money, is a return to the days of little to zero down. As of August 31, 2009, 5.73% of the 2.76 million FHA-endorsed loans had at least one default. After 12 months, FHA and VA loans are suffering the highest re-default rate, at 59.1%. Now, to quote Malcolm X, the chickens have come home to roost. FHA's financial health has been a topic of growing concern as the agency's loan volume exploded and its default rate climbed. The FHA is artificially boosting home sales on the sacrificial pyre of prudent accounting. Long term, these purchases will return more foreclosed houses into the mix, on top of the steady foreclosures, and seven million units of shadow housing inventory coming into the mix. If the FHA's own books cannot stand up to routine inspection, that speaks volumes about its loan origination practices. This if-then structure reminded me of a quote from today's NYT story about insider trading: "If you find yourself chewing the memory card in your cellphone to destroy any record of your misconduct, something has gone terribly wrong with your character." Bottom line: this is just another ingredient in the cocktail that will keep housing prices from increasing long-term. That, in turn, will affect multifamily rents and their valuations.