From the Horses Mouth..... So to speak.... (sorry David)
FHA Commissioner David Stevens explains the need for a few changes to FHA
Today I will be announcing a series of changes to FHA that will affect some of you. As you read about them, please note a few key points.
FHA fell below is legislated requirement to have 2% in excess capital for reserves above and beyond forcasted losses. Being below this 2% requires me, by law, to make changes to get the funds reserves back over 2%. Virtually all of the losses are from 2006, 2007, and 2008 book years. These are the worst years in the housing crisis from an origination standpoint and they contained programs like the SFDPA (seller funded downpayment assistance) that have extremely high default rates.
The changes announced today will get the reserves up and put in place some controls to protect the fund and FHA for the long term, while making sure not to overly, adversely, impact this housing market at a critical time.
You can read about these in any major newpaper today or perhaps tomorrow, but please understand that these are necessary to keep FHA functioning. Without some tightening, we would be under extreme scrutiny and the lack of fiscal soundness could threaten FHA for the long term.
The housing market is slowly coming back to life in many markets across the country. Let's keep working at making this american dream of homeownership be part of a safe and responsible system for the long term.
Thanks for listening and for being a professional in this industry - it's why I post here in active rain - this place is filled with real pros.
Have a geat day.
Can I be the first to say....WOW!!!!! I'm amazed that the housing market is coming back to life....not the fact that FHA fell below the 2% mark. Can I say it again? WOW!
Tom.. a good reblog... in my opinion, it's great to have someone as David Sterns from HUD, to be a part of AR. Maybe we can get someone to actually listen to some of us that are deep in the trenches.... thanks
But he didn't give any information about the changes, just that changes were needed. Where's the actual information?
Donna, best we can tell..... 2.25% UPMIP and 'maybe' 3% seller concessions.
I think the latter is still up for debate... but the UFMIP will be on that mortgagee letter(rumored to be out tomorrow).... You can bet on that!!
Tom,
Great Re-Blog.
I could still debate until the cows come home about SFDPA being the root cause to the problem, but I won't. I thought the real reason was because so many lenders treated FHA as the "New Subprime". We all know the true reason for high defaults. But still good information and I am glad we have a voice from HUD on AR.
I think that these changes are leaked to us because they are looking for feedback. I don't think it was the agents who caused the deep issues our economy faced. True enough there are some unscrupulous ones, that is in every business. I think this economic crises has, or is teaching everyone that to be fiscally responsible is essential for survivial. We want FHA to survive and 2% seems such a small amount to have in reserve. I am curious like Donna to see the other shoe drop. Thanks for keeping us tuned Tom