House Likely to Pass FHA Reform Bill, Not Without Opposition

In the ongoing push among Congress members to reform the Federal Housing Administration, some are saying 2013 must be the year for change. 

Yet the change will not come easily, according to a Bloomberg News report.

Congress has weighed an FHA reform bill as well as specific policy changes including premium increases, and reverse mortgage product changes that have already taken place. But more change is in order before the end of the fiscal year, Congressman Scott Garrett (R-N.J.) said this week before attendees of the Milken Institute Global Conference in Beverly Hills, California, this week as reported by Bloomberg News. 

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Referring to FHA’s majority position in the market for mortgage finance, Garrett said the House will likely pass a reform bill, which will face opposition by the Senate.

“We should be able to get GSE reform and FHA reform done in this calendar year. We’ll get it done in the House and send it over to the Senate, where normally all good bills go to die,” Garrett said, according to the Bloomberg report. 

View the report at Bloomberg News.

Written by Elizabeth Ecker

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  • Is FHA reform dead during this fiscal year? What damage will that do to HECMs?

    One industry leader foolishly came out in the last few months and declared that he believes that the HECM portion of the MMI fund will repair itself through profits. Within weeks HUD declared that the HECM portion certainly will change by September 30, 2013 based on improved housing numbers and despite what the actuaries said. It will be substantially worse.

    Our industry leader said in his editorial that improving housing numbers meant the HECM portion of the MMI Fund would improve. Even the “hated” actuaries said the same thing in their 2012 report by indicating that the negative net position of the HECM portion of the MMI Fund would go from a negative $2.8 billion to a negative $2.67 billion by the end of this fiscal year.

    Well, HUD has a very different position on the issue. They are projecting that the HECM portion of the MMI Fund will grow to a negative $5.4 billion net position.

    So the question becomes, who in our industry understands the MMI Fund? Our leaders are certainly showing, they do not since housing values are improving but the HECM portion of the net position of the MMI Fund is only getting worse.

    It seems our leadership denies any problem with fixed rate HECMs. It is tragic to see what is really going on when compared to how industry leadership is portraying it. Not all of us are sheep.

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