The Federal Housing Administration's projected losses over 30 years could reach as high as $115 billion under a previously undisclosed "stress test" conducted last year to determine how the agency would fare under an extremely severe economic scenario, according to documents reviewed by a congressional committee, the Wall Street Journal reported today. The forecast was significantly worse than the most severe estimate included in the government mortgage-insurance agency's independent actuarial review released last November. The FHA's outside actuaries modeled the analysis along the lines of the annual stress test employed by the Federal Reserve Board, which gauges how the nation's largest financial institutions would fare in the event of a significant economic shock. The FHA isn't required to use the Fed test. The findings are part of an investigation by the House Oversight and Government Reform Committee, headed by Rep. Darrell Issa (R-Calif.).
