FHA Watch, July 2012

Article Highlights

  • 1 in 6 FHA loans delinquent in June.

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  • FHA's net worth down $6B since end of FY 2011.

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  • FHA Denial Dial reaches its lowest level this year.

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This Issue’s Highlight

FHA Watch, No. 7, July 2012

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FHA’s Financial Condition Worsens; Denial Dial Reset to Lowest Level Ever.
One in six Federal Housing Administration (FHA) loans was delinquent in June as the total delinquency rate increased to 16.61 percent. This was due almost entirely to a jump in thirty- and sixty-day delinquencies. The serious delinquency rate ticked up to 9.48 percent.

The FHA’s estimated net worth on a generally accepted accounting principles (GAAP) basis has declined by $6 billion since the end of FY 2011. In June, the FHA had an estimated current net worth of –$23.23 billion and a capital shortfall of $43–62 billion. As a result, the Denial Dial has been reset to –2.16%, eclipsing the previous low set in January 2012.

This Month’s Features

Note from the Editor: The July and August issues of FHA Watch will be limited to updating the monthly features only while we work on analyzing the impact of FHA lending practices on our communities.

Spotlight on Insolvency
FHA’s Estimated Net Worth Continues Sharp Decline to –$23.23 Billion, with a Capital Shortfall of $43–62 Billion

Spotlight on Delinquency
One in Six FHA Loans Delinquent in June, and Serious Delinquency Rate Ticks Up to 9.48 Percent

Spotlight on Best Price Execution
Government Mortgage Complex’s Ginnie Brands Improve on Their Continued Pricing Dominance over Fannie Mae

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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