FHA Remains the Mortgage Lifeline

February 22, 2010 by
Filed under: Breaking News, Mortgage Financing, Politics & Government 

By Robert Freedman

FHA Commissioner David Stevens

David Stevens

FHA helped 2 million borrowers in its last fiscal year, double its volume the previous year. That’s a testament to the crucial role the agency is playing in housing markets, FHA Commissioner David Stevens said on Saturday on Real Estate Today, NAR’s national consumer radio show.

Stevens doesn’t talk about concerns among lawmakers and in the media about whether FHA is getting over-extended or whether the safety measures the agency rolled out about a month and a half ago are working. These include requiring borrowers with a credit score of 580 or less to put up a minimum 10 percent down (it remains 3.5 percent down for those with higher credit scores) and upping the mortgage insurance premium. No doubt it’s too soon to tell what impact those changes are having.

But he does reiterate what has always made FHA a remarkably stable agency over its seven decades, and that’s its focus on owner-occupant borrowers and its requirement that applications be fully documented. As he tells Gil Gross, the show’s host, “We don’t do investment properties. We only do 30-year, fully amortizing, fixed-rate mortgages, and every loan is fully documented, so when we approve a borrower . . . we know their ability to repay that loan has been verified.”

In various forums over the last couple of months, Stevens has been stressing the same point: that his goal is to protect his agency’s credit performance without it retreating so much that it no longer performs its counter-cyclical function of being in the market when others aren’t.

That’s a path whose difficulty real estate practitioners seem to appreciate. As John Anderson, CRS®, GRI, a 30-year real estate veteran who chairs the NATIONAL ASSOCIATION OF REALTORS®’ Federal Housing Policy Committee, says, “I think the FHA is doing the right thing.”

Listen to Stevens’ eight-minute interview on Real Estate Today: RET Radio interview with Commissioner Stevens

More on FHA’s actions to shore up its credit strength is in the April issue of REALTOR®