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Keep FHA and the American Dream

Thursday, September 26, 2013

In recent days, criticism of the likelihood of supplemental FHA funding has generated widespread news coverage. Yet it is equally true that what FHA has accomplished must also be acknowledged.

Since 1934, FHA has served the nation as a reliable and successful program that has provided broad homeownership opportunities to successive generations. More recently FHA played a crucial role through the foreclosure crisis. When private capital fled, FHA remained in operation, keeping the housing market alive by insuring millions of mortgages.

The proposed draw from the U.S. Treasury Department would not have been needed if Congress had not prevented FHA from clamping down on fraudulent seller-funded down payment loans, as it tried to do. It is also the first time in 79-year history that supplemental funding has ever been needed.

FHA's losses are related to only a small portion of its portfolio. In response, FHA has increased its pricing and tightened its underwriting, including the ban on seller-funded down payments and fixing some reverse mortgage problems. These administrative adjustments have led recent loans to perform extremely well.

As the nation continues to financially recover from the Great Recession, a mix of public and private programs will best meet the nation's housing needs. We know that FHA enabled families to have their own American Dream. A temporary and limited capital infusion will keep that same Dream for this and future generations.


For more information, contact Ellen Schloemer at 919-313-8528 or