Housing Market is Stabilizing and on its Way to a Recovery, Says FHA Commissioner

FHA has played a fundamental role in helping stabilize the nation’s housing market; however, FHA reform is critical for keeping the housing and economic recovery on the right track. That’s according to David H. Stevens, assistant secretary of the U.S. Department of Housing and Urban Development and Federal Housing Administration commissioner, in an address to several thousand REALTORS® gathered at a special three-day real estate summit, “REALTORS® on the Rise: Stabilizing the U.S. Mortgage Finance Delivery System”, May 11-13, during the REALTORS® Midyear Legislative Meetings & Trade Expo.

Stevens credited increased home buyer demand, brought about by the home buyer tax credits, and the federal government’s purchase of mortgage-backed securities for helping restore consumer confidence and get the economy moving. “Home prices and sales are beginning to recover, inventories are down, private capital is beginning to re-emerge, investor confidence is coming back and the job market is showing signs of improvement. These all show renewed confidence in the housing market. We need to finish the job now and make the housing recovery sustainable and keep the economy on the right track,” said Stevens. Despite the signs of improving stability, Stevens said that the housing market continues to face challenges, mainly from unemployment and homeowners with negative equity.

According to Stevens, helping underwater borrowers is critical to stemming the tide of foreclosures, and recently announced revisions to FHA and the Home Affordable Modification Program will help stabilize home prices and keep more people in their homes. FHA refinances will help homeowners write down principal balances or modify and restructure loans into safer, sustainable products. HAMP program changes include a forbearance, or temporary assistance, for unemployed homeowners while they look for work.

Stevens said FHA continues to play a pivotal role in housing recovery and reemphasized that reform is critical. “After the housing market crashed, FHA had to step in to play a vital role. Over the past three years, FHA reacted by increasing its market share dramatically. There would be no housing market recovery without FHA; however, the program is at risk. We cannot continue to operate under the current construct if we don’t shore up its fiscal situation. We need to make FHA stronger,” said Stevens.

Stevens asked REALTORS® at the end of the meeting to lend their support for the passage of H.R. 5072, the “FHA Reform Act of 2010,” which would allow FHA to hold lenders accountable for the loans they underwrite and originate, and give FHA the flexibility to respond to changes in the marketplace by granting additional authority to adjust the annual mortgage insurance premium and reduce borrowers’ upfront mortgage insurance premiums."

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