From the Horses Mouth..... So to speak.... (sorry David)
FHA Commissioner David Stevens explains the need for a few changes to FHA
Today I will be announcing a series of changes to FHA that will affect some of you. As you read about them, please note a few key points.
FHA fell below is legislated requirement to have 2% in excess capital for reserves above and beyond forcasted losses. Being below this 2% requires me, by law, to make changes to get the funds reserves back over 2%. Virtually all of the losses are from 2006, 2007, and 2008 book years. These are the worst years in the housing crisis from an origination standpoint and they contained programs like the SFDPA (seller funded downpayment assistance) that have extremely high default rates.
The changes announced today will get the reserves up and put in place some controls to protect the fund and FHA for the long term, while making sure not to overly, adversely, impact this housing market at a critical time.
You can read about these in any major newpaper today or perhaps tomorrow, but please understand that these are necessary to keep FHA functioning. Without some tightening, we would be under extreme scrutiny and the lack of fiscal soundness could threaten FHA for the long term.
The housing market is slowly coming back to life in many markets across the country. Let's keep working at making this american dream of homeownership be part of a safe and responsible system for the long term.
Thanks for listening and for being a professional in this industry - it's why I post here in active rain - this place is filled with real pros.
Have a geat day.