FHA Watch, April 2012

Article Highlights

  • FHA capital position improves only slightly over the last month--still at -$12.05 billion.

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  • Government Mortgage Complex share of outstanding single-family first mortgages is rising.

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  • Government subsidies to Government Mortgage Complex divisions distort the marketplace.

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Read Issue 3, March 2012.
Read Issue 2, February 2012.
Read Issue 1, January 2012.

FHA Watch, No. 4, April 2012

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This Issue’s Highlight

Spotlight on the Government Mortgage Complex’s Market Share: New research indicates the Ginnie/FHA, Ginnie/VA, and Ginnie/USDA divisions’ combined market share of owner-occupied home purchase loans increased to a record level in 2011, notwithstanding efforts to shrink the government’s role to allow more room for private capital. As policymakers continue their efforts to reduce the government’s role in the currently nationalized housing market, the broadly available and deep subsidies provided to the five divisions of the Government Mortgage Complex continue to distort the marketplace and thwart these efforts.

This Month’s Features

Spotlight on Insolvency
FHA Is Estimated to Have a Current Net Worth of –$12.05 Billion and an Estimated Capital Shortfall of $31–50 Billion

Spotlight on Delinquency
Total Delinquency Rate in March Declines to 15.78 Percent; Serious Delinquency Rate Eases to 9.47 Percent

Spotlight on Best Price Execution
Ginnie/VA Division Takes or Ties for the Top Spot on All Ten Best Price Execution Loan Scenarios

Spotlight on the Government Mortgage Complex’s Market Share
Government Mortgage Complex Share of Outstanding Single-Family First Mortgages Is Rising

Spotlight on the Road to FHA Program Reform
Principles to Guide FHA Reform to Achieve Sustainable Homeownership Consistent with the FHA’s Low- and Moderate-Income Mission

Spotlight on the Road to FHA Fiscal Reform
Policy Changes Needed to Implement Fiscal Reform Principle 3

The Road Map to FHA Reform
Specific Steps to Reform and the Status of Each

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About the Author

 

Edward J.
Pinto
  • American Enterprise Institute (AEI) resident fellow Edward J. Pinto is the codirector of AEI’s International Center on Housing Risk. He is currently researching policy options for rebuilding the US housing finance sector and specializes in the effect of government housing policies on mortgages, foreclosures, and on the availability of affordable housing for working-class families. Pinto writes AEI’s monthly Housing Risk Watch, which has replaced AEI’s FHA Watch. Along with AEI resident scholar Stephen Oliner, Pinto is the creator and developer of the AEI Pinto-Oliner Mortgage Risk, Collateral Risk, and Capital Adequacy Indexes.


    An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto has done groundbreaking research on the role of federal housing policy in the 2008 mortgage and financial crisis. Pinto’s work on the Government Mortgage Complex includes seminal research papers submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis” and “Triggers of the Financial Crisis.” In December 2012, he completed a study of 2.4 million Federal Housing Administration (FHA)–insured loans and found that FHA policies have resulted in a high proportion of working-class families losing their homes.

    Pinto has a J.D. from Indiana University Maurer School of Law and a B.A. from the University of Illinois at Urbana-Champaign.

  • Phone: 240-423-2848
    Email: edward.pinto@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: 202-419-5212
    Email: emily.rapp@aei.org

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