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Some stories worth keeping an eye on this morning:

  • The Federal Housing Administration, the giant national mortgage company behind those 3.5-percent-down-payment loans, finally released the findings of its annual audit (FHA press release). We’ve been watching for this because a big chunk (nearly 30 percent) of recent home purchases in San Diego County have been financed using FHA loans. Changes at the agency — more requirements for borrowers, a pullback in the availability of loans — could dramatically affect the local market.

The agency reported its cash reserves — which are mandated to be no lower than 2 percent — fell sharply to 0.53 percent in the last year. Officials said the agency can recover, but critics aren’t so sure (via The New York Times).

The Wall Street Journal’s Nick Timiraos lent this analysis.

The report on how close the FHA has come to burning through its reserves, he said, provides “a clearer picture of whether or when taxpayers will have to foot the bill for the government mortgage insurer’s efforts to stabilize the housing market.”

More from the WSJ:

That could spark a bigger political debate over just what role the U.S. should continue to provide to the mortgage market. The housing market’s growing reliance on the FHA threatens to become a bigger policy problem for Congress and the White House as defaults rise and the agency burns through its reserves.

  • San Diego County should brace for more short sales in 2010, the North County Times reports this morning from a private firm’s analysis. Those are the headache-riddled deals where sellers convince their banks to let them sell their homes for less than is owed on the mortgage.
  • Finally, the WSJ has a long and helpful Q&A about the homebuyer tax credit.
KELLY BENNETT

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