The Federal Housing Administration's mortgage insurance cash reserves fell to the lowest levels in recorded history, 0.53 percent. The FHA announced today FHA cash reserve levels have fallen below the congressionally mandated threshold. The annual independent accounting survey of the FHA came with the assessment that additional action needed to be taken to manage risk to prevent further losses.

The losses are attributed to a record drop in the housing market. FHA has stepped in to provide additional sources of funding for mortgage finance as private sources of funding have dried up. In the second quarter of 2009, nearly 50 percent of all first-time buyers in the entire housing market used FHA-insured loans.

While FHA cash reserves have dropped below the 2 percent threshold mandated by Congress, HUD Secretary Shaun Donovan said at a press conference today, "This is a temporary role which FHA has played in previous economic downturns. The Administration is committed to ensuring that the FHA steps back as private capital returns to the market. With this temporary increased role comes increased risk and responsibility. That's why we are committed to closely monitoring market behavior patterns and economic risks so that we are prepared to enact reforms that ensure the FHA's financial health moving forward."

To read the rest of this article, or to find out more about the FHA's recent financial disclosure, visit ThinkGlink.com.