FHA Watch, June 2013 (Vol. 2, No. 6)
Edward J. Pinto | American Enterprise Institute
June 20, 2013

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Article Highlights

  • Loose lending practices must be stopped to avoid Subprime 2.0.

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  • FHA stress test losses may have hit $115 billion.

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  • The nightmare at FHA continues.

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Explore the Nightmare at FHA Project.

This Issue’s Highlight

Subprime 2.0: The Affordable Housing Nightmare Continues

At the Bipartisan Policy Center’s recent conference entitled “Housing Finance Reform: Is Inertia Gaining Momentum?” representatives of the Government Mortgage Complex called for a repeat of the failed government “affordable housing” experiment begun in the early 1990s. America’s homeowners ultimately lost trillions in this failed government “affordable housing” experiment. Loose lending was the tool used to drive the homeownership rate and home prices to unsustainable levels.

This Month’s Features

Subprime 2.0: The Affordable Housing Nightmare Continues
Calls for Unsustainable Lending Mount

Spotlight on Insolvency
FHA’s Estimated GAAP Net Worth Equals –$27.22 Billion, with a Capital Shortfall of $47–67 Billion

Spotlight on Delinquency
Overall Rate Declines to 14.46 Percent

Spotlight on Best Price Execution
FHA, VA, and USDA’s Pricing Dominance Increase

Spotlight on FHA’s Mission Misfires
Stress Testing: What’s Good for the Goose Is Good for the Gander

End the Nightmare at FHA
Common-Sense Reform of the FHA Is Urgently Needed

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About the Author

 

Edward J.
Pinto

  • Edward J. Pinto is a resident fellow at the American Enterprise Institute (AEI), where he specializes in housing finance and the effect of government housing policies on mortgages, foreclosures, and the availability of affordable housing for working-class families. He is currently researching policy options for rebuilding the US housing finance sector and writes AEI’s monthly FHA Watch.

    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
Show More | See Full Profile

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Squaring the circle: General Raymond T. Odierno on American military strategy in a time of declining resources

AEI’s Marilyn Ware Center for Security Studies will host General Raymond Odierno, chief of staff of the US Army, for the second installment of a series of four events with each member of the Joint Chiefs.

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The Trans-Pacific Partnership and 21st Century Trade Agreements

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International conference on collateral risk: Moderating housing cycles and their systemic impact

Experts from the US, Europe, Canada, and Asia will address efforts to moderate housing cycles using countercyclical lending policies.

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