The FHA stands for the Federal Housing Administration.
It is instituting new rules to try to forestall an appeal to Congress for a bailout.
The FHA wants to force banks to buy back thousands of troubled mortgages.
The federal government’s changes are part of an effort to improve mortgage lending conditions and reduce losses on home mortgages as result of billions of dollars in losses suffered at the nation’s mortgage giants, Freddie Mac and Fannie Mae.
FHA Commissioner Carol Galante said the changes will help the agency protect its mortgage insurance fund, which is in jeopardy of needing a government bail-out.
“FHA must continue to strike a balance between managing risks to its insurance funds and ensuring that FHA products are offered as widely as possible to qualified borrowers,” said Galante. “We hope that the added clarity and certainty provided through these rules will enable lenders to extend financing opportunities to larger numbers of American families as the nation’s housing market and economy continues to recover.”