FHA Anticipates Policy Changes to Address Quality of Existing Portfolio

The Federal Housing Administration (FHA) expects to introduce new policy changes to the market around the end of January, 2010 said David Stevens, Assistant Secretary for Housing and FHA Commissioner in a letter sent to lenders and correspondents last week.

The policies under consideration are intended to address the quality of the existing portfolio, improve the performance of future books of business and will help to return the capital reserve to above the legislated 2 percent level.

“We cannot comment on implementation time lines until decisions have been reached on new policies or policy changes and the manner in which they will be introduced,” said Stevens.  “However, as part of our process of exploring policy options, we will reach out to many industry players to better understand operational impacts in order to best assess a fair implementation time line.”

In November, an independent actuarial study found FHA’s capital reserves were well below the 2 percent required by law.

A separate independent study released the same day on FHA’s reverse mortgage program found the HECM portfolio was performing well.  

David Stevens Letter

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