FHA Takes Draw From Treasury
On September 27th, FHA announced that it would take a $1.7 billion draw from the Treasury to meet their 30-year reserve requirement. It is important to note that FHA has over $30 billion in existing reserves to pay claims. However, under current law they are required to have a full 30-years's worth of projected claims on hand at all times. Most observers believe that FHA's single family mortgage insurance program is healthy and its loan performance is strong. However, the reverse mortgage program (the Home Equity Conversion Mortgage - HECM) has had significant losses, and the single-family program's revenues are being used to offset those losses. Over the last year FHA and Congress have made changes to strengthen the HECM program and prevent future risk.
NAR President Gary Thomas issued the following statement: "The Federal Housing Administration helped provide critical mortgage liquidity to the country during the economic downturn, and like other holders of mortgage risk during that time, it continues to face challenges and incur financial losses. The National Association of Realtors is a strong supporter of the FHA; we believe it is imperative we get the fund back on stable footing as quickly as possible and we are committed to working with the agency and our Congressional allies to further actions and legislation that will help aid in the recovery of the fund so that FHA can continue to serve the home buying needs of Americans."
NAR supports S. 1376 the FHA Solvency Act of 2013, which provides FHA with more flexibility to adjust to market conditions and stabilize its finances.