FHA Watch, August 2013 (Vol. 2, No. 8)

Article Highlights

  • FHA policies continue to harm low-income and minority homeowners.

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  • FHA fails to underwrite for risk, and homeowners suffer.

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Explore the Nightmare at FHA project.

This Issue's Highlight

FHA’s Decades-Long Record of Harming Working-Class Families and Communities


In 1997 and 2002, the National Training and Information Center (NTIC) published two studies confirming earlier criticisms of the Federal Housing Administration’s (FHA’s) weak underwriting and program management practices going back to the early 1960s.

FHA Watch undertook to replicate the NTIC’s 2002 research on the same 22 cities at the zip code level using a 2.4 million FHA loan database. This new study confirmed that the FHA’s underwriting policies continue to disproportionately impact homeowners in low-income and minority zip codes. This is in large measure attributable to FHA’s failure to underwrite for risk or recognize the challenges faced by home buyers in neighborhoods with large concentrations of credit-impaired households.

This Month’s Features

Spotlight on FHA’s Decades-Long Record of Harming Working-Class Families and Communities
Disproportionate Impact on Home Buyers in Low-Income and Minority Zip Codes Continues

Spotlight on Insolvency
FHA’s Estimated GAAP Net Worth Equals –$25.96 Billion, with a Capital Shortfall of $46–66 Billion

Spotlight on Delinquency
Overall Rate Decreases to 14.94 Percent in July from 15.53 Percent in June

Spotlight on Best Price Execution
FHA, VA, and USDA Pricing Dominance Declines

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Edward J.
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