John Taylor, the president and CEO of the National Community Reinvestment Coalition, defended the Federal Housing Administration from recent criticism by House Financial Services Committee Chairman Jeb Hensarling that the agency will not help the economy.
“FHA plays a critical role in the housing market, which it has served very well for many years,” Taylor said, according to RealEstateRama. “The fact is, FHA and Ginnie Mae weathered the worst of the housing crisis, and are still standing. It is unreasonable to expect that they would emerge totally unscathed given the enormity of the crisis, which brought down some of the largest financial institutions in the country. FHA doesn’t guarantee bad product; the product they guaranteed suffered when toxic, subprime and predatory loans brought down the whole housing market and left millions underwater.”
During a meeting of the HFSC on Wednesday, Hensarling said that the FHA is not conducive to a stable housing market, adding that while the agency has helped to serve qualified first-time homebuyers and low- to moderate-income families, the agency has “strayed far from its original mission and legislative purpose.” Hensarling also cited a study that revealed that the FHA single-family mutual insurance fund has a negative value of $16.3 billion.
“FHA has already taken several steps to recapitalize its single-family insurance fund, which should put it well on the way to full financial health,” Taylor said, RealEstateRama reports. “Throughout its history, the FHA has been able to help those toward the bottom of the economic ladder to access homeownership and build wealth through equity. If Congressman Hensarling had his way, Congress would cut off the rungs on that ladder that have allowed so many American families to move into the middle class. FHA’s immediate financial future is of course linked to the health of the housing market and the economy as a whole. The focus for Congress should be measures to boost our economy and help families facing foreclosure.”