FHA Commissioner Cites Postive Developments, Challenges to Housing Markets
May 18th, 2010
Related FHA Stories
- FHA Requests Legislative Approval of Proposals for Reducing Mortgage Risk
- Proposed FHA “Short Refinance” Program Facing Obstacles
- FHA guidelines: Commissioner requesting broader authority for enforcement
- Mortgage lenders adding stricter requirements to FHA guidelines
- FHA Commissioner Cites Reverse Mortgage Loan Program in Request for $250 Million
Story Tools
In an address sponsored by the National Association of Realtors (NAR), FHA commissioner David Stevens noted positive signs of recovering housing markets. Although increasing sales can be partially attributed to the expired federal tax credit program, Stevens also noted that private capital is returning along with investor confidence in housing markets. Stevens also cited signs that employment is improving in some areas, a major factor influencing consumer confidence toward buying homes.
Challenges Remain for Housing Markets
Commissioner Stevens didn’t paint a completely rosy picture of housing markets and FHA accomplishments. In addition to lingering high unemployment, he noted that homeowners owing much more on their mortgage loans than their homes are worth continue to compromise housing recovery; those with upside down mortgage loans cannot qualify for traditional refinancing or sell their homes without mortgage lenders agreeing to accept short sales. Backlogs of mortgage assistance requests are causing long delays in obtaining lender approvals for relief program.
The government has made changes to its Home Affordable Modification Program (HAMP) allowing periods of temporary forbearance and/or modification of mortgage terms for unemployed homeowners; the Department of Housing and Urban Development has also proposed a TARP-funded program to help underwater conventional borrowers qualify for FHA refinance mortgages starting in the fall of 2010. It remains to be seen how many borrowers such programs will help.
FHA Reform Act of 2010: Holding Mortgage Lenders Accountable
The FHA Commissioner is pushing for approval of legislation that will assist FHA in reducing its risk and rebuilding cash reserves used for reimbursing lenders for foreclosure losses on FHA loans. Highlights of the proposed legislation include:
- Allowing FHA to hold its approved lenders accountable for all mortgages they underwrite or originate under FHA programs
- Providing FHA the authority for adjusting its annual mortgage insurance premiums while reducing its up-front mortgage insurance premiums (UFMIP). This plan is designed to reduce up-front costs charged to FHA borrowers and providing additional funds for replenishing falling reserves.
FHA would benefit from this legislation in that it would gain freedom to act quickly in response to housing market conditions and the needs of FHA approved lenders and borrowers. Considering that FHA loans account for about 30% of US mortgage loans, any action increasing the agency’s ability to act in its best interest should be a positive move toward housing recovery.
- |
- |
-
- |
This entry was posted on Tuesday, May 18th, 2010 at 12:33 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
Listen to FHA Loan Pros columnist Peter Miller on American Public Radio: 
RSS Feed
