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Mortgage

FHA sounds alarm on CBO data

Disputes data on the MMI fund, single-family mortgage program

The Federal Housing Administration sounded the alarm on a new Congressional Budget Office report, disputing some of its findings on the mutual mortgage insurance fund and the FHA single-familiy mortgage guarantee program.

On Monday, the CBO reported that the FHA’s single-family mortgage guarantee program moved dramatically from a net savings to a situation where it's costing taxpayers money as borrower defaults move beyond forecasted expectations.

Specifically, the mortgages guaranteed over the past two decades have an expected federal budgetary cost of roughly $15 billion even though the initial cost estimate for those loans suggested $45 billion in savings, CBO suggested.

FHA reached out to HousingWire Wednesday and informed us that these findings are invalid because the data does not consider funds for the 2013 fiscal year.

The CBO declined to comment on the matter when HousingWire followed up with the agency.

The single-family mortgage guarantee books for 2013 posted $17 billion in net value, which would swing the originally reported $15 billion cost to taxpayers to an actual $2 billion taxpayer savings, FHA senior executives explained.

"If you were to look back at the FHA program over the past 21 years, the agency would have a positive net value versus the negative $15 billion loss reported," an executive with the agency told HousingWire.

On a similar note, CBO analysts reported on Tuesday that the increase in the estimated cost of the FHA’s single-family mortgage guarantee and Home Equity Conversion Mortgage (HECM) programs "raised federal spending and the deficit by $22.4 billion the fiscal year just ended."

FHA disputed these claims, noting that the $22.4 billion was the result of the agency’s annual re-estimate portfolio value for 2013.

While the agency’s senior executives admitted the fiscal year posted a negative net change of $22.4 billon, this did not result in a deficit, they claim.

By law, the FHA is required to find some way to transform the negative net change into a positive or neutral amount. As a result, the agency used capital reserves and receipts from the latest fiscal year to pay off roughly $20 billion from its books.

The leftover amount of roughly $2 billion is what was automatically withdrawn from the Treasury, for the first time in its 79-year existence.

The FHA did not explain any specifics as to where the Mutual Mortgage Insurance Fund currently stands, but executives did say the agency has made positive strides, with falling delinquencies and recovery rates.

FHA plans to release its actuarial report within the next few weeks, which will reveal the health of its MMI Fund. 

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