FHA Watch, March 2012

Article Highlights

  • FHA is still firmly in the red, with net worth of -$13.45 billion.

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  • Ginnie/USDA may be the next crisis in the "Government Mortgage Complex."

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  • USDA Guaranteed Rural Housing Loan Program's default rate exceeds the FHA’s

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

The Big Picture

FHA Watch, No. 3, March 2012

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The Federal Housing Administration (FHA) — along with the entire “Government Mortgage Complex” (Fannie Mae, Freddie Mac, Ginnie/USDA, Ginnie/FHA, and Ginnie/VA) of government-owned mortgage lenders — remains in deep trouble. Though its capital position improved slightly over last month, the FHA is still firmly in the red, with a current net worth of –$13.45 billion. Particularly alarming is the growth of the Ginnie/USDA division, which has a higher default rate than the FHA.

This Month’s Features

Spotlight on Insolvency
FHA Is Estimated to Have a Current Net Worth of –$13.45 Billion and an Estimated Capital Shortfall of $32–51 Billion

Spotlight on Delinquency
Total Delinquency Rate in February Declines to 16.47 Percent; Serious Delinquency Rate Eases to 9.73 Percent

Spotlight on Ginnie/USDA
Meet the FHA’s Country Cousin, the USDA Guaranteed Rural Housing Loan Program: Its Default Rate Exceeds the FHA’s

Spotlight on Best Price Execution
A Clean Sweep by the Ginnie/USDA and Ginnie/FHA Divisions

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 Reform Principle 2

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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