Former Reagan budget director warns of new housing bubble

Coinciding with the potentially troubling housing market outlook is the Federal Housing Administration’s imminent taxpayer bailout.

“FHA is still in denial … but it’s a slow-motion train wreck,” Edward Pinto, visiting fellow at the American Enterprise Institute and author of studies on the housing industry, told The Daily Caller News Foundation earlier. A report last November revealed that agency was projecting a $16.3 billion loss — one that, unless agency policies changed, would require them to ask the administration for money to cover their losses.

“As my colleagues and I always say, ‘They are one recession away from a catastrophic loss to the taxpayers,’” Pinto added.

Mortgage rates rose Thursday from an average of 3.42 percent to 3.53 percent, according to Freddie Mac, the government-backed mortgage company. While it was the sharpest rise in 10 months, mortgage rates are still hovering around 30-year lows.

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