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» VISIT US ONLINE @ DSNEWS.COM 53 DS News Government Progress Report k ey per sonnel Julian Castro Secretary of Housing and Urban Development Helen R. Kanovsky Acting Deputy Secretary (General Counsel) Jennifer Ho Senior Advisor to the Secretary Carol Galante FHA Commissioner and Asst. Secretary for Housing Katherine M. O'Regan Asst. Director for Policy Development and Research Ted Tozer President, Ginnie Mae Mike Anderson Chief Human Capital Officer Melanie R. Newman Asst. Secretary for Public Affairs John L. Gant Director for Office of Healthy Homes and Lead Hazard Control Kevin Cooke Acting Chief Information Officer David Sidari Deputy CFO David A. Montoya Inspector General, Office of the Inspector General John Benison Director, Office of the Departmental Equal Employment Opportunity (ODEEO) DS News Housing Score B- BUSINESS SCOPE FHA sets standards for construction and underwriting and insures loans made by banks and other private lenders for home building. The goals of this organization are to improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and to stabilize the mortgage market. REGULATION AND OVERSIGHT FHA is a division of the U.S. Housing and Urban Development Agency. MISSION » FHA was created during the Great Depression of the 1930s to help people buy homes, and today it is still a program that helps people get into a home with lower down payments and other beneficial programs. » On March 26, 2010, HUD and Treasury announced enhancements to the FHA Refinance program, designed to make homeownership more affordable for borrowers whose homes were worth less than the remaining balance on their mortgage loans. SUCCESSES » FHA assumes 100 percent of risk on bad mortgages, and this resulted in the agency's capital reserve account balances to drop to new lows, requiring federal funds to help cover insurance costs issued to date. » To fund a share of the losses experienced by FHA associated with this program, $8 billion in TARP funds were made available. Funding was subsequently reduced to $1 billion in FY 2013 due to low utilization. » The independent actuary estimates that the Fund's overall economic net worth has improved by $15 billion, from negative $16.3 billion to negative $1.3 billion, while the capital ratio has improved from negative 1.44 percent to negative 0.11 percent. » As a result of the Great Recession, at its lowest point, in 2012, the agency had a budget of negative-$13.4 billion and the New York Times reported that 2.4 million loans insured by FHA showed a pattern of risky lending that could create billions of dollars in damages for hundreds of thousands of homeowners. The New York Times claimed that FHA had simply ignored red flags in loans it insured in 2009 and 2010, imperiling borrowers. » Nevertheless, FHA claims it has helped 3.5 million families (75 percent being first-time home buyers) purchase homes since 2009. » As of September 30, 2013, FHA guaranteed 3,015 refinance loans with a total face value of almost $489 million. Only one default has been realized. » The agency has requested (as it has since 2010) a $400 billion budget from the federal government. It projects $199.3 billion in loan volume this year. OPPORTUNITIES/ISSUES » FHA has been and is currently receiving criticism concerning the high cost of mortgage insurance and recent rate increases. Critics say that these high rates exploit borrowers who cannot obtain financing from other sources. » This has been called an under-the-radar tax on low-to-moderate income consumers and is so well disguised as to be undetectable. It is said that HUD's inability to manage FHA is now being supported by mortgage consumers who can least afford it. » FHA Commissioner Carol Galante said the increased premium is necessary to fund the agency's Mutual Mortgage Insurance Fund, and that FHA is not planning to reduce it. » Because of these high rates, one economist pointed out that if the economy were to slide back into recession, the majority of FHA loans would be at high risk of default. He suggested that low-risk borrowers would be better off to get financing from the private sector. » Although FHA-backed loans offer first-time buyers a down payment of as little as 3.5 percent, compared to a minimum of 5 percent for loans backed by Fannie Mae, premiums on FHA loans are considerably higher. Srouces report that FHA should be required to inform borrowers of the difference in insurance costs for FHA and Fannie Mae loans. PRESIDENT OBAMA'S MAKING HOME AFFORDABLE PROGRAM FHA participates in the Making Home Affordable Program by offering loans with lower down payments than required by other lending sources. 7.8 million families have an FHA mortgage FHA helped more than 500,000 families buy their first home in 2013 First time FHA homebuyers during past 3 years totals 3.3 M FHA helped 500,000 families reduce housing costs by av. $200 per month FHA helped 450,000 families avoid foreclosure in 2013 Federal Housing Administration (FHA) | CORPORATE HEADQUARTERS: Washington, D.C. 7.8 MILLION 500,000 FAMILIES 3.3 MILLION 500,000 FAMILIES 450,000 FAMILIES

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