Exclusive: Commissioner David Stevens
Exclusive to Real Estate Today, FHA Commissioner David Stevens joins us to talk about how the FHA has helped the economy. With over 34 million families using the FHA since the late 1930s, the program was created under Franklin Roosevelt’s administration during times similar to today.
Up to 40% of the transactions today are FHA backed, which reflects the lack of capital in the mortgage financing market since the collapse of the subprime market. When you look at the FHA’s portfolio, nearly 80% of all the transactions this year are for first time homebuyers. The FHA provides a very unique vehicle which is helping to make this housing market sustain itself and recover at a very difficult time in the economy.
The FHA is very focused on the credit quality and the strength of the fund, going forward, and it has changed policies to deal with this. The FHA has hired a new chief risk officer, brought in a new head of single family business, and the secretary, Shaun Donovan, has stated that there is nothing more important than insuring the quality of the FHA fund, going forward.
With over 30 billion dollars in capital, the FHA has not required any tax payer money. There has been no bailout required and the total combined capital ratio is over 4%. When compared to other industry players who participated in this mortgage market over the last decade, the FHA is only institution of its size that hasn’t needed special funds from the government, a bailout, or hasn’t failed. The FHA sees itself today in a far better position than any of the other participants found themselves at this time in the housing cycle.
