FHA Watch, November 2012
Edward J. Pinto | American Enterprise Institute
November 20, 2012

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Article Highlights

  • FHA records -$34B economic value.

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  • FHA insurance in force and capital shortfalls are growing.

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  • FHA financial condition looking more dire than ever.

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Read Issue 9, September 2012.

FHA Watch, No. 11, November 2012

Download PDF This Issue’s Highlight

FHA Has a −$34 Billion Economic Value

The Federal Housing Administration’s (FHA’s) recently released FY 2012 Actuarial Study confirmed the decline in financial condition that FHA Watch has been tracking over the past year. While the Department of Housing and Urban Development (HUD) attempted to downplay the report, the FHA’s economic value is currently −$34 billion given today’s low interest rate environment.

The FHA’s insurance in force has been growing, as have its capital shortfalls. These trends and the FHA’s poor financial condition are cause for significant concern for Congress and taxpayers.

This Month’s Features

Spotlight on FHA’s Economic Value
FHA Has a −$34 Billion Economic Value

Spotlight on Insolvency
FHA’s Estimated GAAP Net Worth Equals –$25.38 Billion, with a Capital Shortfall of $45–67 Billion

Spotlight on Delinquency
Delinquency Rates Decline

Spotlight on Best Price Execution
FHA’s Pricing Dominance Eases as the FHA Announces Premium Changes

The Road Map to FHA Reform
Immediate Action Needed to Address the FHA’s Fiscal Crisis

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About the Author

 

Edward J.
Pinto
  • An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Edward Pinto has done groundbreaking research on the role of government housing policies in the lead-up to the financial crisis. In particular, his data have revealed striking facts about the contributions of housing policy to the mortgage crisis. Two of his major research papers have been submitted to the Financial Crisis Inquiry Commission: "Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study" and "Triggers of the Financial Crisis." At AEI Mr. Pinto is continuing his work on the role of housing policies in the financial crisis and researching policy considerations and options for rebuilding our housing-finance sector.
  • 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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