While the Federal Housing Administration still faces challenges ahead, the agency has already taken a number of significant steps to mitigate risk and increase the solvency and strength of the mortgage-insurance fund. That’s according to National Association of REALTORS® President Gary Thomas, who testified today before the U.S. House Financial Services Subcommittee on Insurance, Housing and Community Opportunity about the future of the FHA.
“Realtors® believe that recent increases to premiums, increased down payments for some borrowers and greater risk management controls will help to substantially improve the FHA’s financial condition,” says Thomas, “These changes combined with an improving national economy and rising home prices will surely help stabilize the fund so that FHA can continue to serve the needs of hardworking American families who wish to purchase a home.”
Thomas notes that FHA has also implemented a number of other measures to help improve the health of the fund, including hiring the agency’s first credit risk officer to help better manage risk, implementing credit score floors, and instituting significant lender enforcement and oversight measures to increase the return to the fund.
FHA sustained housing markets nationwide during the economic and housing downturn, and like other holders of mortgage risk, it incurred financial losses as a result of employment and market conditions that led to increased foreclosures. However, had FHA not stepped in to fill the market void, many families would have been unable to purchase homes, housing values could have dropped an additional 25 percent, and the country would be much further from a recovery, says Thomas.
FHA continues to be one of the primary sources of mortgage financing available to families today as private capital slowly makes its way back into housing finance markets. As housing markets continue to stabilize and improve and new mortgage regulations are finalized, NAR anticipates that the private mortgage market will return and FHA’s market share will return to traditional levels.
Increased private capital in the mortgage market doesn’t obviate the need for additional reforms to FHA to further enhance and protect the availability of mortgage credit so that the fund can maintain its vital role to home buyers, said Thomas. NAR strongly supports legislation that would give FHA greater flexibility to quickly change program requirements and help protect the fund from losses. NAR also supports legislation that would allow FHA to improve its enforcement and oversight of lenders.
“REALTORS® urge Congress to quickly consider these bills to ensure FHA has the tools it needs to be able to continue to serve its mission of providing home buyers with safe, affordable financing in all markets,” says Thomas.
For more information visit www.realtor.org.