After weeks of taking the heat for the dire financial position of the Federal Housing Administration’s mortgage insurance fund, Department of Housing and Urban Development Secretary Shaun Donovan this week spelled out a plan for getting FHA back on track.
In an editorial published in National Mortgage News titled “Here’s How We’ll Push FHA Back into the Black,” Secretary Donovan outlined changes that have already taken place and stressed that the agency’s newer loans are not responsible for the downward pressure on the fund.
Donovan writes:
While FHA has enacted substantial reforms under the current administration, this year’s actuarial review makes clear that loans made prior to and at the outset of the recent crisis continue to weigh heavily on the health of the MMI Fund. Therefore, building upon the significant efforts already undertaken to protect and preserve the MMI Fund, FHA is implementing a series of additional actions to continue improving the fund’s trajectory over both the short and long term. Using the actuary’s model, collectively, these changes are projected to provide billions of economic value for the MMI Fund in FY 2013.
The changes made since 2009 to FHA’s lender oversight, credit policies and premium pricing have yielded substantial improvements in the quality of new loans endorsed by FHA. But significant opportunity remains to reduce the impact on the fund of poorly performing legacy loans severely impacted by the recession, and to provide greater assistance for distressed borrowers as they seek to recover and find meaningful assistance in dealing with their delinquent loans. With a majority of FHA’s projected losses attributable to loans insured from 2007-2009, FHA will take several additional steps to maximize recovery in the areas of loss mitigation and asset management….
Read the entire article at National Mortgage News.
Written by Elizabeth Ecker
