FHA Watch, May 2013 (Vol. 2, No. 5)
Edward J. Pinto | American Enterprise Institute
May 22, 2013

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Article Highlights

  • FHA capital position slightly better in April.

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  • National Association of Realtors aims to make FHA lending policies even more unsustainable.

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  • FHA lending policies promote cycle of failure for working-class families.

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Explore the Nightmare at FHA project.

This Issue’s Highlight

Forty percent of recent government-guaranteed modified loans redefault within 12 months

In another example of the Federal Housing Administration’s (FHA’s) mission failure, the redefault rate after 12 months on government-guaranteed modifications (government mods) hovers around 40 percent for loans modified in 2010, 2011, and 2012. This is double the failure rate for all other loan mods made by the government-sponsored enterprises (GSEs), private investors, and portfolio lenders. Government mods relate to loans insured by the FHA or Veterans Affairs (VA), with a high proportion relating to the FHA. Notwithstanding this stunning level of failure, another 36,000 government-guaranteed loans were modified in quarter 4 2012. 

This is yet another example of the nightmare at FHA—policies that promote a cycle of failure for working-class families.
 
This Month’s Features

Continuing the Nightmare at FHA
The National Association of Realtors Calls for Unsustainable FHA Lending

Spotlight on Insolvency
FHA’s Estimated GAAP Net Worth Equals –$27.36 Billion, with a Capital Shortfall of $47–67 Billion

Spotlight on Delinquency
Overall Rate Declines to 14.68 Percent

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

Spotlight on FHA’s Mission Misfires
Forty Percent of Recent Government-Guaranteed Modified Loans Redefault within 12 Months

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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