WASHINGTON–The acting head of the Federal Housing Authority (FHA) outlined “four pillars of reform” the agency recently published as part of plans around reforming the GSEs.
Brian Montgomery, acting deputy Secretary with HUD and assistant secretary of Housing, and Federal Housing Commissioner, told NAFCU’s Congressional Caucus here, “We want to strengthen the housing market. I know that seems obvious, but we want to make sure people understand that. We want better technology tools, especially for the segment of the market FHA and Ginnie Mae serve.”
The four pillars put forth in its plan include:
Pillar One: Maintaining and strengthening the mission at FHA and its counter-cyclical role in the housing market. That includes greater collaboration between the Federal Housing Finance Agency (FHFA) and FHA as well as improvements in service to low-income and first-time homebuyers. The final piece of the pillar, said Montgomery, is ensuring FHA and other housing agencies aren’t competing with each other.
Pillar Two: Ensuring taxpayers are protected. “Having to draw on Treasury funds again to sustain our books is not acceptable. That means not just meeting the 2% capital level set by Congress, but exceeding that.”
Pillar Three: Reducing risk and improving data analytics. Montgomery said there is a need to strengthen its third party and other market surveillance tools. “These tools include greater autonomy, more flexibility when it comes to human resources, and that means the ability to hire talent who have the special skills we need.”
Montgomery added, “And we believe FHA should be rechartered as an autonomous agency within HUD.”
Pillar Four: Ensuring liquidity to and access to various programs for everyone, including credit unions “we believe the Ginnie Mae platform is secure and robust, but it needs to continue its modernization efforts. At FHA, we remain committed to all participants, whether large or small.”
Montgomery noted Congress had appropriated $20 million for technology upgrades in its platforms, and said he is hopeful it is just a down payment on additional funds to come.
Separately, Montgomery said credit unions have seen “seriously” lower delinquency rates in FHA loans than other lenders, 2% vs. 3.8%. Overall, credit unions made 1.5 million FHA loans in 2018, he said.