The steady decline in mortgage originations at big banks is leading some analysts to predict that the institutions may exit the space altogether
The House Financial Services Committee’s Housing and Insurance Subcommittee is questioning the fiscal health of the Federal Housing Administration.
In a hearing last week, the subcommittee set its sights on the FHA’s Mutual Mortgage Insurance Fund and the Home Equity Conversion Mortgage – the government insured reverse mortgage – despite assurances from a top housing official that both programs are sound.
Edward L. Golding, principal deputy assistant secretary of the Department of Housing and Urban Development, told the subcommittee that the MMI Fund had improved by $19 billion over the last year. He also insisted that the HECM was fundamentally sound, and had become even sounder in the wake of policy changes made in 2013 that improved its sustainability.
But subcommittee chairman Blaine Luetkemeyer (R-Mo.) wasn’t buying.
“FHA has suffered a case of mission creep, and the unfortunate truth is that the lack of sound underwriting and risk management puts both homebuyers and U.S. taxpayers at risk,” Luetkemeyer said. “While the most recent independent actuarial report showed signs of a modestly healthier agency, the bottom line is that FHA is still in a precarious state.”
A release by the House Financial Services committee criticized the FHA for morphing from an agency “focused on first-time homebuyers and other creditworthy low- or moderate-income borrowers” to “a dominant component of our mortgage finance system.”
“The underlying problems at FHA, high volatility and questionable underwriting, have existed for years and continue to pose a threat to all Americans,” Luetkemeyer said. “We need to continue to focus on commonsense reform and creation of a more stable housing market and housing finance system.”
In a hearing last week, the subcommittee set its sights on the FHA’s Mutual Mortgage Insurance Fund and the Home Equity Conversion Mortgage – the government insured reverse mortgage – despite assurances from a top housing official that both programs are sound.
Edward L. Golding, principal deputy assistant secretary of the Department of Housing and Urban Development, told the subcommittee that the MMI Fund had improved by $19 billion over the last year. He also insisted that the HECM was fundamentally sound, and had become even sounder in the wake of policy changes made in 2013 that improved its sustainability.
But subcommittee chairman Blaine Luetkemeyer (R-Mo.) wasn’t buying.
“FHA has suffered a case of mission creep, and the unfortunate truth is that the lack of sound underwriting and risk management puts both homebuyers and U.S. taxpayers at risk,” Luetkemeyer said. “While the most recent independent actuarial report showed signs of a modestly healthier agency, the bottom line is that FHA is still in a precarious state.”
A release by the House Financial Services committee criticized the FHA for morphing from an agency “focused on first-time homebuyers and other creditworthy low- or moderate-income borrowers” to “a dominant component of our mortgage finance system.”
“The underlying problems at FHA, high volatility and questionable underwriting, have existed for years and continue to pose a threat to all Americans,” Luetkemeyer said. “We need to continue to focus on commonsense reform and creation of a more stable housing market and housing finance system.”
