New at TWI: Why the Federal Housing Administration Can’t Fail, But Probably Will
Our finance writer Mary Kane reports that a bruised, battered and little-noticed federal agency responsible for insuring mortgages is about to take a prominent role in the government’s effort to fix the foreclosure crisis.
The Federal Housing Administration — which was relegated to the sidelines for the last eight years — has now been tasked with taking on 50 percent of the mortgage sector. Long neglected by the Bush administration, much of its top staff departed, leaving behind a demoralized, fraud-ridden agency. If the FHA is expected swoop in as the savior of homeowners, Mary reports that it has a tall order to fill:
Overall, the FHA needs to increase its staff, increase training for its staff, increase the the oversight of its appraisals and underwriting, and improve the way it vets lenders taking part in its programs, [HUD Assistant Inspector General James] Heist said. The number of FHA lenders approved for its programs jumped by 330 percent over the last year, as credit tightened. But the agency still has problems with continuing to allow lenders with past predatory abuses into its programs, he said.
Mary’s story helps explain the hurdles that the federal government must clear to minimize the damage from the mortgage fall-out — even if a program seems promising.
The piece is an example the kind of work we will be doing at TWI through the first 100 days of the Obama administration and beyond: What does change look like, and what forces stand in the way?