FHA Reform

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housing market boomThe Federal Housing Administration has taken critical measures to eliminate risk that would ultimately strengthen the mortgage-insurance fund.  Realtors are saying that recent increases to premiums, increased down payments for some borrowers and greater risk management controls will significantly improve the condition of the FHA. These changes along with an improving economy and rising house prices will stabilize the fund so that Americans still have hope of pursuing the American Dream.

The Federal Housing Administration has implemented some significant measures such as hiring the agency’s first credit risk officer to help manage the risk by implementing credit score floors, and instituting significant lender enforcement and oversight measures to increase the return to the fund. FHA continues to be one of the primary sources of mortgage financing available to families today as private capital slowly makes its way back into housing finance markets. As housing markets continue to stabilize and improve and new mortgage regulations are finalized, the National Association of Realtors anticipates that the private mortgage market will return and FHA’s market share will return to traditional levels.

Increased private capital in the mortgage market does not eliminate the need for additional reforms to FHA that would further enhance and protect the availability of mortgage credit so that the fund can maintain its vital role to home buyers. However, the NAR strongly supports legislation that would give FHA greater flexibility to quickly change program requirements and help protect the fund from losses. NAR also supports legislation that would allow FHA to improve its enforcement and oversight of lenders. Once the rules for mortgage finance are resolved and housing prices stabilize nationwide it is anticipated that private investors will return to the market and FHA’s market share will return to more traditional levels. The Nar supports change that would keep the FHA fun strong but they do not want the FHA’s market share to be disrupted for fear it would undermine a fragile real estate recovery.

For some FHA loan applicants, that up- front payment requires some serious budgeting and preparation, but thanks to the FHA Reform Act, some of that up- front payment can now be shifted to the annual mortgage insurance premium, giving FHA loan applicants more time to save and make room for the Mortgage Insurance Payment in their budgets.

FHA continues to play a significant role in the housing market and recovery. There is no doubt that they have continued to serve the needs of hardworking American families who want to purchase a home.

Source: NAR Applauds FHA for Reforms.” Realtor Magazine. 30 Apr. 2013. Web. 01 May 2013.

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