About 40 percent of today's home loan applications are for FHA mortgages, insured by the Federal Housing Administration. And nearly 80 percent of those home loan applicants are first-time home buyers, according to FHA commissioner David Stevens.
The FHA provides a very unique vehicle which is helping to make this housing market sustain itself and recover at a very difficult time in the economy, Stevens said when interviewed by a reporter for the Real Estate Today radio program (sponsored by the National Association of Realtors).
The FHA guidelines are very focused on the credit quality and strength of the fund and has recently changed policies to deal with this, he noted. It has hired a new chief risk officer, and brought in a new head of single family business. With more than $30 billion in capital, the FHA has not required any tax payer money. There has been no bailout required and the total combined capital ratio is over 4 percent.
When compared to other industry players who participated in this mortgage market over the last decade, the FHA is the only institution of its size that hasn't needed special funds from the government, a bailout, or hasn't failed, Stevens pointed out. The FHA sees itself today in a far better position than any of the other participants at this time in the housing cycle, he said.
Over 34 million families have used an FHA mortgage to finance their home purchase since the late 1930s. The program was created under Franklin Roosevelt's administration during times similar to our current situation.
Jim Woodard writes a nationally syndicated column and freelance features on real estate and mortgage news and trends. Email:
storyjim@aol.com