FHA audit delay could mean agency will need bailout

On Wednesday, the Federal Housing Administration was supposed to release its independent audit determining the soundness of the agency. Many have questioned that soundness because, as of Oct. 1, its reserve fund dipped below the required 2 percent of the agency's outstanding loans for the first time in its history. On Tuesday night, the agency abruptly canceled the release of that audit report, citing problems with the risk scenarios, according to The Washington Post.

Obviously, those problems stem from the fact that the independent auditors determined that the risks to the agency were higher than FHA Commissioner David H. Stevens has admitted to publicly. What's being questioned now is whether or not the FHA can rebuild its cash reserves without a bailout from the government. FHA has faced an increasing number of defaults as its loan volume expanded.