Lowering credit score requirements for new borrowers isn’t likely to raise their overall risk profiles, according to industry stakeholders
The fate of the Federal Housing Administration (FHA) has become a politically-charged issue in Capitol Hill. Since 2008, the FHA has taken on a significant amount of risk as the lender of last resort in the United States. If not for Fannie Mae, Freddie Mac and the FHA, the American housing market would have suffered an even more damaging collapse since it is unlikely that the private sector could have provided the financial guarantees that the government-sponsored mortgage investors have extended to borrowers over the last few years.
The sustainability and financial condition of the Federal Housing Administration (FHA) is not as bad as initially thought. Days before President Barack Obama issued a spending proposal to keep the FHA alive, analysts at Bloomberg and the Wall Street Journal speculated that the improving median home prices in the United States are helping to reduce the troubled agency’s mortgage investment portfolio. The analysts were right in this regard, but the White House’s assessment of the FHA also revealed plenty to be concerned about.
Seniors looking for a big cash payout from a reverse mortgage will have to look elsewhere for needed funds.
(NAR) -- Major news outlets have been talking about the Obama Administration possibly requesting $943 million from the U.S. Treasury this year to shore up the finances of the Federal Housing Administration. But whether the 80-year-old agency will actually need the cash infusion is far from clear.
The United States government has been very proactive in terms of stimulating mortgage lending activity since the disastrous collapse of the credit markets in 2008. Mortgage interest rates have been pushed down to historical low levels through the Treasury's Operation Twist and the third round of quantitative easing (QE3), which makes the government a major investor in mortgage-backed bonds. Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) now guarantee almost all mortgages originated in the U.S. these days, The White House is very involved in foreclosure prevention and mitigation programs.