Federal Housing Administration (FHA) Commissioner and Deputy Secretary of the U.S. Department of Housing and Urban Development (HUD) Brian D. Montgomery is in the midst of navigating the American housing sector through the economic shock of the COVID-19 coronavirus pandemic, emphasizing the necessity of the agency’s role in providing its services in times of stress.
This is according to an interview the Commissioner gave to American Banker. As an insurer, FHA is acutely aware of downside risk, and is considering how to provide backing for new mortgages in which the homeowner might be in default before the loan is sold to investors, according to American Banker.
FHA is reportedly “looking at various options” to address that concern, according to Montgomery, but did not elaborate. Montgomery would not rule out measures to mitigate potential risk to the FHA’s insurance fund, including raising premiums, he told the outlet.
“We want to make sure that our cash [inflows] exceed our cash outflows, so again, we’re looking at a lot of different things, and premiums being one of them, but there are other things that we’re considering as well,” Montgomery tells American Banker reporter Hannah Long.
This week, the the Federal Housing Finance Agency (FHFA) said that it would insure loans in forbearance, and that Fannie Mae and Freddie Mac would begin purchasing loans in forbearance in order to lower pressure on originations as lenders tighten their standards in response to the economic shock of the pandemic.
“I expect we’ll probably have something next week that will help address some of that issue relative to borrowers who have closed but haven’t been securitized yet and go into forbearance,” Montgomery told American Banker.
“This crisis, like others, has put an exclamation point on why the FHA is so vital and so critical during both good times and less than good times, like we’re seeing now with the coronavirus,” Montgomery tells American Banker reporter Hannah Long.
Montgomery, who served as FHA Commissioner previously during the financial crisis that hit the nation in the latter days of the George W. Bush administration, oversaw another economic shock that more squarely fell on the American housing sector.
He was also a part of the administration during the September 11, 2001 attacks, and served as a point of contact between National Aeronautics and Space Administration (NASA) and the White House after the space shuttle Columbia was destroyed in 2003.
For his role, Montgomery reiterated FHA’s commitment to serve American housing needs in the midst of the uncertainty created by the current crisis, including keeping reverse mortgages available to seniors who may need them, he said.
“We’re here to make sure that in good times and bad people can buy a home, refinance, take out a reverse mortgage,” Montgomery told Long. “We’re not chasing any sales goals or volume here.” If the private market can’t serve low- to moderate-income borrowers, “we’re here to make sure that we can do what we need to do,” he continued. “And sometimes that means our volume grows and sometimes it means it contracts.”
Read the full interview at American Banker.