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29 » VISIT US ONLINE @ DSNEWS.COM FHA CHIEF GOLDING DEFENDS AGENCY'S HEALTH TO CONGRESS e Federal Housing Administration (FHA)'s Mutual Mortgage Insurance (MMI) Fund, Home Equity Conversion Mort- gage (HECM) program, and the Agency's mission were the focal points in Principal Deputy Assistant Secretary Edward Golding's testimony before the House Subcommittee on Housing and Insurance. e hearing, titled "e Future of Hous- ing in America: Examining the Health of the Federal Housing Administration," was the sixth on the topic in the House Subcom- mittee on Housing and Industry during the 114th Congress. e capital ratio of the MMI Fund sat at 0.41 percent, less than a quarter of its 2 percent minimum required by Congress, for Fiscal Year 2014. For FY 2015, that number shot up to 2.07 percent, even after the FHA took some heat for lowering the MMI premium by 50 basis points in January 2015. "FHA's Mutual Mortgage Insurance Fund bore the strain of the Great Recession, falling below its required capital reserve and eventu- ally taking a mandatory appropriation in 2013," Golding said in his testimony on ursday. "However, FHA's focus on risk management, increasing revenue, and program improvements resulted in the ratio returning to 2 percent in 2015. is achievement was the result of FHA's prudent policy changes, and an ability to work with Congress to pass stabilizing legislation and quickly implement program changes over the course of several years." Citing a 14 percent year-over-year spike in building permits and an 11 percent increase in housing starts over-the-year in 2015, along with the recent announcement that the unemploy- ment rate had dipped below 5 percent, Golding said stated that "FHA's position is strong and continues to improve. FHA remains com- mitted to its mission to address underserved borrowers and mortgage markets." House Subcommittee on Housing an Insurance Chairman Blaine Luetkemeyer (R- Missouri) was skeptical, however. Luetkemeyer claimed that while the FHA's mission has historically focused on first-time homebuyers and creditworthy low- and moderate-income buyers, "FHA has morphed from a mortgage insurer of last resort to a dominant component of our mortgage finance system by expanding its insurance to higher income borrowers and houses in the upper end of the marketplace." Luetkemeyer stated that "FHA has suffered a case of mission creep, and the unfortunate truth is that the lack of sound underwriting and risk management puts both homebuyers and U.S. taxpayers at risk. While the most re- cent independent actuarial report showed signs of a modestly healthier agency, the bottom line is that FHA is still in a precarious state." Golding defended against the assertion that the FHA's mission had drifted away from its original intention, noting that 82 percent of all FHA purchase originations in FY 2015 were to first-time homebuyers (totaling more than 614,000 loans). "With its low down-payment requirement, FHA has served as a pathway to homeowner- ship for first-time homebuyers," Golding said. "is has been especially true in recent years, as credit restrictions and higher financing costs have impeded many potential borrowers, in- cluding those that would previously have been served by the conventional market." "FHA's position is strong and continues to improve. FHA remains committed to its mission to address underserved borrowers and mortgage markets." —Edward Golding, Principal Deputy Assistant Secretary, Office of Housing, U.S. Department of Housing and Urban Development Edward Golding