Housing Market, Bailouts | featured news

The Federal Housing Administration's cash reserves have dropped so low that there is a close to a 50 percent chance it could run out of funds and may require a taxpayer bailout next year, the Wall Street Journal said, citing an annual independent audit of the agency's finances.

Mortgage finance giant Freddie Mac FMCC.OB said on Monday it would ask for an additional $1.5 billion from taxpayers due to losses stemming from the weak housing market.

The Obama administration on Friday released its long-awaited proposal for overhauling the mortgage market, calling for gradually shutting down bailed-out Fannie Mae and Freddie Mac and reducing the government's now huge role in housing finance.

The housing and mortgage markets aren't likely to improve much over the next year, which will make it harder for the government to reduce its support of the sector, Freddie Mac's chief executive said on Monday.

That figure, projected through 2013, represents a worst-case scenario that assumes a double-dip recession, the Federal Housing Finance Agency says. The finance giants have so far received about $148 billion in taxpayer funds.

A grand jury has indicted the chief executive of what was once among the nation's largest independent home-loan providers on 16 counts of bank, securities and wire fraud.

Top officials say Washington Mutual was largely the victim of the housing downturn. But two former WaMu risk officers tell a Senate panel the failed savings and loan took too many chances.

The plight of homeowners unable to refinance despite massive aid to banks is a volatile political issue.

Fannie Mae plans to tap $11 billion in new government aid after posting another massive quarterly loss as the taxpayer bill from the housing market bust keeps growing.

Freddie Mac, facing mounting damage from the U.S. housing crisis, said Wednesday it will ask the government for nearly $31 billion in additional aid after posting a gargantuan loss of more than $50 billion last year.