MBA's Broeksmit Comments On FHA's Annual Report to Congress

Rob Van Raaphorst
(202) 557- 2799

WASHINGTON, D.C. (November 15, 2018) - Robert D. Broeksmit, CMB, President and CEO of the Mortgage Bankers Association (MBA), issued the following statement regarding the U.S. Department of Housing and Urban Development's (HUD) Annual Report to Congress Regarding the Financial Status of the FHA Mutual Mortgage Insurance Fund.

"The continued growth of the Capital Reserve Ratio is welcome news, and indicates that FHA is effectively serving its core mission in the single-family market - providing safe and affordable credit to qualified first time and low-and moderate-income borrowers - while appropriately managing its risk and protecting taxpayers. 

"The increase in the MMIF capital ratio to 2.76% in fiscal year 2018 moves the program farther above the 2% statutory minimum. Importantly, the forward book of business continues to perform well, with significant improvements in key indicators such as serious delinquencies, early payment defaults, claims payments, and loss rates.

"We are glad to see that FHA is closely monitoring the increasing risk in the forward portfolio, indicated by rising debt-to-income ratios, declining credit scores, and the increasing use of downpayment assistance programs. While current FHA delinquencies are quite low, it is prudent to keep an eye on these trends to ensure the program does not face undue challenges if, and when, the economy and job market cool.

"The drain on the fund presented by the HECM program continues a trend that MBA has highlighted previously and remains a topic of concern. Reverse mortgages are an important financial tool that, if used properly, can allow the growing number of retirees to age in place. MBA applauds the recent steps FHA has taken to stabilize and improve the HECM program, and policymakers should continue considering ways to insulate the forward program from the volatility in the reverse program."