The net effect of the hikes and proposed discounts would add a total of $1 billion to FHA receipts in fiscal years 2012 and 2013, Galante told a Senate subcommittee March 8.

The agency's reserve fund -- the amount held back after making provision for expected claims -- declined from 0.53 percent of its total portfolio in 2009, to 0.5 percent in 2010 and 0.24 percent last year. For single-family mortgages, which make up 94 percent of the portfolio, the 2011 reserve was just 0.12 percent.

"The FHA clearly didn't allocate enough capital to the loans it insured from 2007 to 2010," said Morris A. Davis, a professor of real estate and urban land economics at the University of Wisconsin-Madison's School of Business.

Apart from the reserve account, the FHA had budgeted $29 billion for expected claims at the end of fiscal 2011, about $900 million less than the agency will need, according to its actuary's estimates. The FHA said in November it wouldn't set aside the additional $900 million, an action that would have reduced its capital reserve further.

Over the last three years, the agency paid out $37 billion in claims -- more than it expected and more than double the preceding three years -- and "has not yet seen the peak of claim expenses," which could come this year, according to the annual report.

Negative Equity

Property values are important to the FHA insurance fund. Negative equity -- homeowners owing more on their mortgages than their houses are worth -- is one of the most important triggers of defaults, Gyourko wrote in a November 2011 paper, "Is FHA the Next Housing Bailout?" published by the American Enterprise Institute, a Washington think tank that advocates for limited government.

The FHA will lose at least $10 billion more than it projects on 2009 and 2010 loans to first-time homebuyers who also took advantage of an $8,000 tax credit, Gyourko says. The credit was offered as part of Obama's $787 billion economic stimulus package.

Gyourko called the credit a form of down-payment assistance, and noted that borrowers who receive such assistance are more likely to quit paying their mortgages.

'False And Irresponsible'

Raphael Bostic, HUD's assistant secretary for policy development and research, called Gyourko's assessment "completely false and irresponsible" in the agency's blog, The HUDdle. About 1 million first-time buyers used FHA insurance during the 13 months the tax credit was available, and their "failure rate" is less than 1 percent, he wrote.