FHA Watch, September 2012
Edward J. Pinto | American Enterprise Institute
September 19, 2012

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Article Highlights

  • FHA’s financial condition continues to decline; Denial Dial once again reset to lowest level ever.

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  • House passes FHA Emergency Solvency Act including policy changes recommended by FHA Watch.

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  • One in six FHA loans delinquent in August; serious delinquency rate nearly unchanged at 9.49 percent.

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FHA Watch, No. 9, September 2012

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FHA’s Financial Condition Continues to Decline; Denial Dial Once Again Reset to Lowest Level Ever

One in six Federal Housing Administration (FHA) loans continued to be delinquent in August as the total delinquency rate eased slightly to 16.35 percent. This was due to modest declines across all delinquency categories.

In August, the FHA had an estimated current net worth of –$26.30 billion and a capital shortfall of $46–65 billion. The FHA’s estimated net worth on a generally accepted accounting principles (GAAP) basis has declined by $10 billion since the end of FY 2011. As a result of these data, the Denial Dial has been reset to –2.43 percent, eclipsing the previous low set in July 2012.

This Month’s Features

Spotlight on Returning the FHA to Its Traditional Mission
Reforms Needed to Get the FHA Back on Track

Spotlight on Insolvency
FHA’s Estimated Net Worth Continues Sharp Decline to –$26.30 Billion, with a Capital Shortfall of $46–65 Billion

Spotlight on Delinquency
One in Six FHA Loans Delinquent in August; Serious Delinquency Rate Nearly Unchanged at 9.49 Percent

Spotlight on Best Price Execution
Fannie Guarantee Fee Increase May Further Entrench Ginnie Brands’ Pricing Dominance

The Road Map to FHA Reform
House Passes FHA Emergency Solvency Act Including Policy Changes Recommended by FHA Watch

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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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