FHA Risk Management Improvements Sought by Coalition

The coalition reaffirmed its support of FHA and Ginnie, but said new authorities are needed to separate human resources, contracting, legal assistance, budgeting, and earnings management. Doing so would improve the risk management of these federal housing delivery programs, the group said.

The National Housing Conference (NHC) formed the coalition, which comprises Fannie Mae, Freddie Mac, the Mortgage Bankers Association of America (MBA), the Enterprise Foundation, the National Association of Home Builders, the National Association of Realtors, the Local Initiatives Support Corporation, and the National Council of State Housing Agencies, as well as the NHC itself.

Michael F. Petrie, MBA vice chairman, said the FHA program is very successful, but action must be taken to ensure it remains viable and to make sure it increases homeownership opportunities for minorities and first-time homebuyers.

“The FHA program not only continues to achieve its mission of promoting homeownership and affordable rental housing, it creates profits for the federal government, a rarity for federal programs,” Petrie said in a statement. “This money can and should be used to further strengthen FHA housing programs.”

Emphasizing the lack of affordable housing for low-income households, the coalition suggested ways to strengthen FHA and Ginnie.

The group supports President Bush’s proposals in his 2002-2004 fiscal budgets that Congress create a tax credit to drive affordable housing production. The tax credit should be used to provide assistance to developers who produce housing in economically distressed areas, the group said.

Along those lines, the coalition also suggested a rental production program, which would expand and preserve the supply of affordable rental housing for extremely low-, low, and moderate-income families in mixed-income communities. This would be funded through federal appropriations.

“To narrow the massive affordability gap afflicting millions of America’s households, we are saying to Congress and the Bush Administration, ‘Here is the foundation for tomorrow’s national housing policy’,” stated Conrad Egan, NHC executive director. “Housing offers “families the opportunity to build wealth, promoting self sufficiency, strengthening communities, and providing a foundation for the economic growth of our nation.”

While national homeownership is nearing an all-time high, half of extremely low-income homeowners face severe cost burdens, as well as 56% of renters in the same income group. This is because gaps between supply and demand for affordable housing are largest for this income group, the coalition said.

The coalition formed to generate support for the “Meeting our Nation’s Housing Challenges” report released in May by the federal Millennial Housing Commission. The report reconfirmed the housing shortage and called for changes. The group also formed to compel Congress to address the pressing housing crunch.

“Congress has engaged in healthy debates around health care and education, but has said and done very little about affordable housing,” said F. Barton Harvey, CEO of the Enterprise Foundation, in a statement.