FHA Watch, October 2013 (Vol. 2, No. 10)

Article Highlights

  • The safe long-term operation of the US mortgage market depends on prime loans.

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  • FHA and NAR continue to work to expand the subprime credit box.

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This Issue’s Highlight

Spotlight on Efforts to Expand the Subprime Credit Box

The National Association of Realtors (NAR) has been steadfast in its support of subprime loans and undeterred by the loans’ demonstrable harmful impact on working-class families and neighborhoods. The Urban Institute recently added to the subprime chorus with the release of a report entitled Opening the Credit Box. These calls for expanding subprime lending fly in the face of one immutable fact: the safe operation of the US mortgage market over the long term depends on the preponderance of loans being prime—loans with a low risk of default under stress conditions.

This Month’s Features

Spotlight on Efforts to Expand the Subprime Credit Box
Government’s Guarantees of Subprime Loans Harm Working-Class Families and Communities

Spotlight on Best Price Execution
Lower-Risk Borrowers Steered to FHA Loans Overpaid an Estimated $710 Million in FY 2013 

Spotlight on Insolvency
Government Accountability Office Confirms Oversight Benefits of Private GAAP Methodology 

Spotlight on Delinquency
Little Change in Various Rates from August to September 

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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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