http://portal.hud.gov/hudportal/documents/huddoc?id=fromthedeskof021811.pdf

FHA MIP Increase This week, February 14, I announced an increase in the Mortgage Insurance premium at FHA in the amount of .25% per year. It is important for all to at least understand the reason. I know there may be many responses to this, and I will be unable to respond, but I do think it important for all to understand the obligation. FHA has suffered greatly from originated loans in years 2006-2008 and fortunately due to the changes we have implemented in the past two years since I was sworn in, we have managed to avoid external intervention into the program that could have forced even more conservative policies to impact your business. I speak today, Feb 16, to the House Financial Services committee. Some will want, and do want, to eliminate all guarantees from FHA. It is through responsible management that I will argue against the need to intervene. As I am sure you are aware, FHA has a statutory obligation to maintain a 2% capital reserve. We have been below that now for two annual actuarial reports to congress and this year it actually dropped further than the previous year. While there are reasons for this, like select mortgage Programs that really hurt the fund, it won't matter much to legislators as their primary concern is that we become compliant with the law and get the reserves back up. In the last year actuarial, submitted in October, it said that in the base case we would not get above 2% until 2015 and, additionally, there was a 40% risk that we could actually go negative. Going negative would require a direct subsidy from the treasury.......a step that simply is unacceptable. I recommended this increase. I recommended the increase based on my obligation to get the reserves back up.  I do understand the concerns of those in the industry. Unfortunately, if we do not get the reserves back up it would be likely that congress would take their own actions which could make the outcome even worse. While I do not expect all to agree, I have made these moves to actually protect the program so that it could continue. Thanks

The cost of protecting the housing market by stabilizing just Freddie Mac and Fannie Mae cost $150 billion alone. Bank bailouts with TARP, NSP, HAMP, first time homebuyer tax credits, the impacts to tax bases of states and communities across America, the impacts to millions of Americans harmed by this over speculation with exploding loans, the now roughly 25% of homeowners in negative equity......all of this will cost every American for years to come. The white paper released last Friday insures a careful transition, but the direction is right. The three options presented are just that; options. The debate will require everyone to get involved. http://www.washingtonpost.com/wp-dyn/content/article/2011/02/12/AR2011021203363.html?tid=wp_ipad Housing loans made sensible Saturday, February 12, 2011; 6:34 PM ANYONE WHO still thinks that President Obama is a "socialist" hasn't read the 31-page white paper on housing finance his administration released Friday...........