FHA Officials: Housing is Back on Track

The Federal Housing Administration is back on its financial footing during an unprecedented time in the agency’s history, its chief officials said last week during an industry conference panel.

“We are on the right track financially, and will continue to help American people reach their dreams of owning a home,” said Carole Galante, FHA commissioner and assistant secretary for housing, during a National Association of Realtors conference in San Francisco. “We’ve implemented a series of policy initiatives in recent years to ensure that people who cannot get a mortgage in the private market can get help through FHA.”

Galante cited mortgage insurance premium raises and better risk pricing as leading to more stable lending across new books of business versus old, troubled loan portfolios. 

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“We increased premiums because they were too low given the risks FHA was exposed to during the crisis,” she said, according to NAR. “Today, FHA has priced the risk appropriately, with some cushion.”

The current state of FHA including a recent $1.7 billion cash infusion from the Treasury was a specific measure for a specific situation, said former commissioner Brian Montgomery.

“The current situation is both technical and temporary,” said Montgomery, who served as FHA commissioner from 2005 to 2009. “FHA is a government mortgage insurance program that’s been around since the Great Depression; it’s here to help working families have access to credit, and God forbid in times of economic calamity, FHA is there for you. Like the old Timex commercial, it takes a licking and keeps on ticking.”

The panelists also spoke of legislation introduced to reform housing, including the “FHA Solvency Act of 2013,” introduced by Senate Banking Committee Chair Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, and the “PATH Act,” introduced by House Financial Services Chairman Jeb Hensarling, R-Texas.

“I think the Senate’s Johnson-Crapo bill is really focused on helping FHA have some additional authority,” said Galante. “It’s not perfect, but it’s focused on providing the tools that FHA needs in the short term.”

Written by Elizabeth Ecker

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