STATEMENT: CAP’s Julia Gordon on the Federal Housing Administration’s Financial Status

STATEMENT: CAP’s Julia Gordon on the Federal Housing Administration’s Financial Status

Washington, D.C. v The president’s budget, released today, estimates that the Federal Housing Administration will need to draw $943 million from the U.S. Treasury to keep its reserve fund at the required level, primarily because of losses in the FHA reverse mortgage program. Julia Gordon, CAP’s Director of Housing Finance and Policy, issued the following statement:

The surplus in FHA’s core business of insuring single-family mortgages shows that the agency’s strategy of adjusted premiums, better management, and targeted policy changes made in recent years is working.

The reverse mortgage program is still struggling, however, and FHA should make changes quickly to put it on a sounder financial trajectory. Congress should provide FHA with the authority to act swiftly to reduce risk going forward.

Today’s request simply reflects an accounting requirement for FHA to reserve enough money to pay all claims over the next 30 years if FHA went out of business today. The agency still has enough cash in its coffers—around $32 billion—to pay claims for years to come.

FHA has not only funded home loans for 7 million families but has also prevented even more catastrophic home-price declines in the wake of the financial crisis. Such declines not only would have resulted in far more underwater homeowners and foreclosures, but would have also cost 3 million additional jobs and sent our economy into a double-dip recession.

Related resources from CAP:

Examining the Proper Role of the Federal Housing Administration in our Mortgage Insurance Market by Julia Gordon
The Federal Housing Administration Saved the Housing Market by John Griffith

To speak with a CAP housing expert, please contact Katie Peters at or 202.741.6285.

Contact:
Katie Peters
Phone: 202.741.6285
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