FHA Watch, May 2012

Article Highlights

  • FHA capital position worsens in April, with current net worth at -$13.79 billion

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  • Government’s growing dominance in home mortgage and student loan markets is concerning

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  • In 2011, Government Mortgage Complex accounted for 88 percent of all first-mortgage originations

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Read Issue 4, April 2012.
Read Issue 3, March 2012.

This Issue’s Highlight

FHA Watch, No. 5, May 2012

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Spotlight on the Government’s Growing Monopoly of Consumer Lending and Private Debt:
Outstanding consumer debt totals over $12 trillion, constituting 44 percent of all outstanding private debt (both consumer and business). Home mortgages ($9.8 trillion) and student loans ($0.9 trillion) comprise the two largest asset classes within the consumer debt sector. In 2011, the Government Mortgage Complex accounted for 88 percent of all first-mortgage originations in the United States, with the government also controlling an estimated 90 percent of the student loan market. The government’s growing dominance in the home mortgage and student loan categories is cause for concern, posing a threat to private investors, borrowers, and taxpayers.

This Month’s Features

Spotlight on Insolvency
FHA’s Position Worsened in April, with an Estimated Current Net Worth of –$13.79 Billion and a Capital Shortfall of $33–52 Billion

Spotlight on Delinquency
Total Delinquency Rate Increased in April to 15.97 Percent Because of Increase in Thirty-Day Delinquencies; Serious Delinquency Rate Eased to 9.42 Percent

Spotlight on Best Price Execution
The Government Mortgage Complex’s Ginnie Brands Demonstrate Pricing Dominance over Fannie Mae

Spotlight on the Government Mortgage Complex’s 2011 Market Share
Government Mortgage Complex Accounted for 88 Percent of All 2011 First-Mortgage Originations

Spotlight on the Government’s Growing Monopoly of Consumer Lending
Government-Controlled Home Mortgage and Student Loan Asset Classes Account for 86 Percent of Outstanding Consumer Debt 

Spotlight on the Road to FHA Fiscal Reform
Policy Changes Needed to Implement Fiscal Reform Principle 4

The Road Map to FHA Reform
Specific Steps to Reform and the Status of Each

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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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