FHA Watch, March 2013 (Vol. 2, No. 2)

Article Highlights

  • FHA still spinning fairly tales about its practices.

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  • FHA 60-day delinquency rate is rising.

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  • FHA capital position continues to decline.

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Read Volume 2, Issue 1, January/February 2013.
Explore the Nightmare at FHA project.

This Issue’s Highlight

FHA Fairy Tales
A number of fairy tales were told by FHA Commissioner Carol Galante in remarks on March 7 at J.P. Morgan’s Securitized Products Research Conference. FHA Watch separates fact from fiction in this new recurring feature.

This Month’s Features

FHA Fairy Tales
Debunking Two Fairy Tales from a Speech by FHA Commissioner Carol Galante on March 7

FHA’s Family vs. Loan Claim Rate
Since 1975, FHA’s Average Claim Rate on a Borrower Basis Is 1 in 8 Families (12.5 Percent)

Spotlight on Insolvency
FHA’s Estimated GAAP Net Worth Equals –$27.31 Billion, with a Capital Shortfall of $47–66 Billion

Spotlight on Delinquency
Overall Rate Steady at 16.7 Percent with Rise in 60-Day Delinquencies

Spotlight on Best Price Execution
FHA, VA, and USDA’s Pricing Dominance Little Changed

Spotlight on Differences Between the Practices of the VA and the FHA
An Overview of Veterans Affairs’ Use of Appraiser Panels

End the Nightmare at FHA
Fundamental and Comprehensive Reform of the FHA Is Urgently Needed

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About the Author

 

Edward J.
Pinto
  • American Enterprise Institute (AEI) resident fellow Edward J. Pinto is the codirector of AEI’s International Center on Housing Risk. He is currently researching policy options for rebuilding the US housing finance sector and specializes in the effect of government housing policies on mortgages, foreclosures, and on the availability of affordable housing for working-class families. Pinto writes AEI’s monthly Housing Risk Watch, which has replaced AEI’s FHA Watch. Along with AEI resident scholar Stephen Oliner, Pinto is the creator and developer of the AEI Pinto-Oliner Mortgage Risk, Collateral Risk, and Capital Adequacy Indexes.


    An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto has done groundbreaking research on the role of federal housing policy in the 2008 mortgage and financial crisis. Pinto’s work on the Government Mortgage Complex includes seminal research papers submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis” and “Triggers of the Financial Crisis.” In December 2012, he completed a study of 2.4 million Federal Housing Administration (FHA)–insured loans and found that FHA policies have resulted in a high proportion of working-class families losing their homes.

    Pinto has a J.D. from Indiana University Maurer School of Law and a B.A. from the University of Illinois at Urbana-Champaign.

  • Phone: 240-423-2848
    Email: edward.pinto@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: 202-419-5212
    Email: emily.rapp@aei.org

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