FHA Tag Archives

GAO Releases Report on Housing Finance Reform

The Government Accountability Office (GAO) issued a new report Housing Finance: Prolonged Conservatorships of Fannie Mae and Freddie Mac Prompt Need for Reform. The report, prepared for Chairwoman of the House Committee on Financial Services Maxine Waters (D-CA) and Congressman Sean Duffy (R-WI), calls on Congress to “consider legislation for the future federal role in housing finance that addresses the structure of the enterprises, establishes clear, specific, and prioritized goals and considers all relevant federal entities, such as FHA and Ginnie Mae.”

The GAO reviewed 14 housing finance reform proposals from Congress, agencies, industry groups and think tanks. They found that most assessed potential changes to the housing finance system, such as addressing fiscal exposure, protecting investors and considering the implications of the transition to a new system. However, many proposals lack clearly defined and prioritized goals or do not address the role of other federal entities in the housing finance system, such as Federal Housing Administration (FHA) and Government National Mortgage Association (Ginnie Mae).

Since 2013, GAO has designated the federal role in housing finance as a high-risk area because of the explicit fiscal exposure for the federal government. As of October 2018, the dollar amounts of Fannie Mae and Freddie Mac’s (enterprises) outstanding mortgage-backed securities (MBS) have grown by more than $800 billion since the end of 2008. Together, the enterprises and Ginnie Mae have issued or guaranteed 95 percent or more of all MBS issued annually since 2008.

FFB Risk Sharing Program Ends

The Federal Financing Bank (FFB) multifamily risk-sharing initiative with Housing Finance Agencies (HFAs) officially ended on Dec. 31, 2019. In February of 2018, HUD announced that it would end the FFB financing initiative on Sept. 30, 2018. In September of 2018, HUD then granted an extension through the end of the year to review the program’s effectiveness.

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HUD Temporarily Extends FFB Risk Share FFB Initiative

HUD has announced it will be extending its Multifamily risk-sharing initiative with the Federal Financing Bank (FFB) for eligible Housing Finance Agencies (HFAs) through December 31, 2018. The initiative was originally scheduled to cease accepting new applications for commitments from HFAs on September 30, 2018, but will now accept new applications for commitments under this initiative through the end of the year, up to the current program maximum of $3 billion.

FHA intends to review the program’s effectiveness, and whether market conditions justify its continued operation. The results of this review will determine whether and in what form FHA would continue the program beyond December 31, 2018. If the program is extended for a limited time period beyond 2018, HUD would identify the parameters under which it would be phased out.

The FFB Risk Share Initiative was started in 2015 to stimulate affordable housing production in response to tightening bond markets and lack of private sector funding and liquidity that followed the financial crisis. The initiative is designed so that FHA and HFAs share in the risk of the mortgage, and works as follows:

  • Participating HFAs enter into contracts with HUD that provide for reimbursement to HUD for a portion of any insured loss; 
  • HFAs use their own underwriting standards and assume at least 50 percent of the risk of loss; and
  • “A” rated HFAs have access to capital funds provided by the FFB, a government corporation that purchases the obligations of federal agencies. The HFAs then lends those funds to private developers for projects that meet certain affordability criteria.

 

 

Bell Op Ed Calls on Senate to Confirm FHA Commissioner Nominee

In his 5/2/18 column for National Mortgage News, “Vote to confirm Trump’s FHA commissioner has been delayed too long,” NH&RA President and CEO Peter Bell says that despite having a qualified candidate ready to serve, Senate leadership on both sides of the aisle have ignored their responsibility to vote on Brian Montgomery’s nomination as Federal Housing Administration commissioner.

Read the full opinion editorial on National Mortgage News: https://www.nationalmortgagenews.com/opinion/trumps-nominee-for-fha-loan-commissioner-deserves-a-senate-vote