As I stated a few days ago at San Diego's Preferred Lender I mentioned the fact that FHA rumored to be running low on reserves. Well, looks as though it may be coming into fruition. One moment we are told by the Feds that the FHA gas tank is full and the next minute the gas tank appears to be running on fumes. Are we coming out of a recession or not?? See below and decide for yourself:

Pressure from loan defaults has pushed cash reserves at the Federal Housing Administration below mandated minimum levels, but the agency's head says taxpayers won't be asked to make up the difference. Instead, the agency is pressing ahead with policy changes aimed at reducing its exposure to risk as the FHA coffers have been hit by staggering losses from defaults and fraud.

Borrowers will be required to have higher credit scores, though the agency did not release details of what the heightened credit requirements will be. Among the other significant changes are a raise in cash reserve requirements for lenders that handle FHA loans. The current standards call for $250,000 but will be raised by $1 million and possibly more in the future.
In addition, the agency will appoint for the first time a risk compliance officer who will be responsible for overseeing risk of the insurance fund. FHA is establishing new credit rules to verify income and credit history as well in order to minimize defaults in the future.
Another change likely to gain attention is FHA's moves to "assure appraiser independence." A similar move by government-sponsored enterprises Fannie & Freddie have drawn widespread criticism in the industry for holding up modifications to distressed loans. FHA has never used taxpayer money to cover losses from its borrowing program, but has been hit hard by the rash of defaults that have plagued the industry. Part of the formula for making up the drop in reserves is likely to entail addressing fraudulent loans that contributed to the FHA's losses. The agency is preparing its actuarial study that will be submitted to Congress in November.
FHA has about $30 billion in reserves, representing 4.4 percent of the loans it insures. The agency is a key backer for first-time homeowners and is now insuring about 5.3 million mortgages, compared to 4 million three years ago.