By The Washington Post

Published: Saturday, November 17, 2012, 8:36 p.m.
Updated: Sunday, November 18, 2012

WASHINGTON — The Federal Housing Administration said on Friday that it will once again raise its mortgage insurance premiums and take a series of other steps in hopes of putting the agency on firmer financial footing and avoiding the need to seek taxpayer aid for the first time in its 78-year history.

The move means new borrowers of FHA-backed loans will pay an average of $13 more per month in premiums. While the increase should help bolster the agency's bottom line, every bump in prices also makes mortgages more expensive for the very borrowers that the FHA is tasked with helping.

“It's a tightrope,” FHA Commissioner Carol Galante said on Friday of carrying out her agency's mission while also ensuring that it stays solvent. “We continue to look at that balance every day.”

The changes occurred as an independent audit of the FHA released on Friday showed that mounting losses from mortgage delinquencies — particularly on loans the FHA backed between 2007 and 2009 — left the agency's reserves with a projected $16.3 billion deficit as of Sept. 30.

Friday's results underscored the debate about the proper role of the government in backstopping the nation's housing market and how much risk taxpayers should face in order to ensure that mortgage markets continue functioning through good times and bad. Roughly nine out of 10 new mortgages are backed by the federal government.

Critics such as Sen. Bob Corker, R-Tenn., say the FHA has “strayed a long way from its original mission” and that the government should not be in the business of backing loans “to people who can't pay them back.”

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