Government Lending

FHA gets a budget boost to stem staff shortages. Is it enough?

Former agency officials question whether a cash injection is enough to take on systemic problems like uncompetitive pay, a lengthy hiring process and an imminent wave of retirements


The Federal Housing Administration (FHA), within the department of Housing and Urban Development, provides mortgage financing for borrowers the conventional market doesn’t serve, yet it has been understaffed for over a decade.

The department’s leadership is now fighting for resources to address the issue, and HUD appears poised to receive a lifeline. A House-approved omnibus spending bill includes $431 million for FHA payroll and expenses — nearly $30 million more than it got last year.

But former FHA and HUD employees question whether a cash injection is enough to solve systemic problems, including uncompetitive pay, a lengthy hiring process and an imminent wave of retirements. Nearly two-thirds of career staff are nearing retirement age, which could deepen an institutional brain drain.

Each of FHA’s counterparts in the conventional mortgage market have about three times as many full-time employees. A 2022 HUD budget report said that the Office of Housing—which includes FHA—had 2,470 employees. Fannie Mae had 7,400 full-time employees as of Dec. 18, 2021, while Freddie Mac had 7,284 at the end of January.

Meg Burns, executive vice president at the Housing Policy Council and former director of single-family program development at the FHA, said that during her time at the administration more than a decade ago, the employee shortage severely limited work the FHA could do.

“Of course [Fannie Mae and Freddie Mac] can provide better program guidance, of course they can provide training to the marketplace and hold the hands of lending institutions who are trying to operate their programs,” Burns said. “They’ve got 25 people and we’ve got half a person.”

A spokesperson for HUD said the department’s leadership is working to address staffing shortages, and is already making progress.

“The impact of Secretary [Marcia] Fudge’s commitment to increasing staffing levels is already being realized in her first year,” the HUD spokesperson said.

A solution presents itself

HUD’s staff shortage has been brewing for a long time, but it’s now directly threatening the agency’s mission.

A November 2021 HUD inspector general report charted a 30% staffing decline from 2012 to 2019, which it said “significantly eroded” HUD’s ability to carry out its mission.

But the department may now finally be getting the resources it requires to tackle the issue. If passed by the Senate and signed into law, the Office of Housing would receive $431 million for salaries and expenses this year. That’s just shy of the $452.3 million HUD requested, and an increase from the $404.2 million it received for salaries and expenses in 2021. 

Part of this budget will go to hiring an additional 125 employees, raising the Office of Housing headcount to 2,595 full-time employees.

Dana Wade, chief production officer at Walker & Dunlop and former FHA commissioner during the Trump administration, said that there are steps HUD could take to broaden its recruitment. She highlighted the “presidential management fellows program,” and said that some of FHA’s best leaders came up through the program.

“But there’s more that HUD should do,” Wade said. “I really think that the FHA should do more to connect with universities to do direct recruiting.”

To tackle budget issues in the long term, former employees have suggested that the FHA should go around Congress altogether, and fund itself.

Burns said that the HPC put together a proposal a few years ago to make FHA into a government corporation, but the proposal never went anywhere. 

“It takes a lot in Washington to move that kind of idea along,” she said. “You have to line up the right people to support it, but I will tell you, that concept has been around for decades.”

“It’s designed to give FHA access to its own revenue to support its operations, and to give FHA a little bit of autonomy so that they can have the kind of staff that they need.

Ted Tozer, former Ginnie Mae president, said that it’s only fair the FHA should have access to the money it brings in.

“FHA is a moneymaker, not an entity that is costing the government money and they should have access to it,” said Tozer.

Stick to the plan

HUD’s Office of Housing plans to hire at least as many employees this year as last, but a slow hiring process and uncompetitive pay stand in the way. 

Last year, the Office of Housing’s headcount increased by a little over 100 employees to 2,470, per HUD’s budget in brief report.  The Office of Housing also outlined plans to hire an additional 125 employees in 2022.

Currently, the FHA has three dozen open career staff vacancies via USAJOBS and nine out of 16 positions are vacant in FHA’s assistant secretary for housing office.

However, despite the need to bring new employees on board, HUD has struggled to fill vacancies in a timely manner.

A HUD IG report from August 2021 found that the department’s average time to hire an employee was 141 days, 38 days longer than the department’s self-imposed goal of 103 days.

The watchdog said that HUD’s failure to hire staff in a timely manner stems from the Office of Chief Human Capital Officer (OCHCO) not putting into place mechanisms that would reduce the length of the hiring process. The IG also found that training for the hiring process was inconsistent, and hiring roles and responsibilities were unclear.

In light of record numbers of workers quitting — 48 million workers quit last year — finding talent and retaining poses a challenge. Wade said that the bureaucratic hiring process keeps the FHA from bringing in top talent in the first place.

“Right now, there is a war for talent. We spent just about all our time trying to recruit talented people [when I was at the FHA],” Wade said. “FHA needs to hire qualified people who can manage the risk and understand finance and understand how to run the business.”

But beyond an unwieldy hiring process, the administration cannot pay at the same level that a private sector company can, Wade said. Even when compared to other federal housing agencies, FHA falls short.

“FHA loses people to the regulator across the street, the Federal Housing Finance Agency, because they can pay on an independent pay scale, so they can pay more money than HUD can,” she said.

Tozer said that because FHA’s pay scale is not as competitive as Fannie Mae’s or Freddie Mac’s, the administration struggles to replace talent that leaves.

“The career staff that is retiring believed in the mission, but now you’re trying to recruit new people who don’t have the same kind of ties to the program and it’s going to be tougher to recruit at the same pay scale,” Tozer added.


Former HUD officials say that apart from staffing shortages, another issue affecting morale and the direction of the administration is the leadership vacuum at the top of FHA.

Julia Gordon’s confirmation as FHA commissioner has been in limbo since last year, bogged down in part by a tweet that Gordon made criticizing the police. In January 2022, after the Senate returned it, the White House again submitted Julia Gordon’s nomination.

But the stalemate has continued. To move forward, Senate Maj. Leader Chuck Schumer, of New York, would have to devote floor time to debate her nomination.

Edward Golding, former principal deputy assistant secretary for housing, views this as the most pressing issue for the FHA. Golding said that confirming Gordon as the commissioner would be a good first step in beginning to address the staff shortage at the FHA.

“You need a strong leader [at FHA] to push issues that impact the FHA,” said Golding. “We have a secretary who has some good ideas, but you just need more execution, and you need more people.”

A HUD spokesperson said in a statement that the department “looks forward to the swift confirmation of [Gordon], so that our department can continue to deliver for the American people.”

One former HUD official who requested anonymity said that Lopa Kolluri, principal deputy assistant secretary at the FHA, should get some recognition for running the administration without a commissioner.

“She has been doing the job of an FHA commissioner for over a year and she’s not even Senate confirmed,” the former HUD official said.

The former HUD official said that FHA’s reluctance to lower mortgage premiums is a reflection of Kolluri’s leadership. At the end of last year, FHA said 7.28% of its loans were seriously delinquent, down from a seasonally adjusted high of 12.04% in March 2021.

“I have been pleased that [Kolluri] has been cautious in running the FHA,” the former official said.

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