Reform focused on sustainable lending would have FHA target a projected average claim rate of 5 per 100 insured loans under normal circumstances and 10 per 100 insured loans under stress circumstances.  This rate is about five times the normal default level for prime loans and about half the FHA's traditional default level under normal circumstances.

We need better housing finance structures and ideas: The timing of the covered bond bill is certainly appropriate.

In less than twenty-five years, government “affordable housing” and other housing policies have turned a healthy market into a financial ruin. Until Fannie and Freddie’s market dominance and the government’s role in the housing finance system are substantially reduced or eliminated, the United States will continue to have an inferior and unstable housing market.

FHA Watch, a new monthly online publication, will focus on the government’s 100 percent taxpayer-backed Federal Housing Administration (FHA) mortgage guarantee program and the risks it poses for taxpayers, families, and communities. 

Borrowers should get relief now, and the banks should get a guarantee down the road.

HUD recently issued its first official response to the report "Is FHA the Next Housing Bailout?", providing important insight into the perspective of HUD’s leadership on the issue of the solvency of the FHA insurance fund.

In order to prevent the next housing bubble, countercyclical loan-to-value limits in the form of increased down-payment requirements must be implemented in order to discourage the inrush of speculative inflation.

The risk-retention requirements of the Dodd-Frank Act (DFA) were enacted in the belief that they would improve thequality and reduce the risk of securitized mortgages by requiring securitizers to have -skin in the game.