Q&A with FHA Commissioner David Stevens
The Federal Housing Administration is making tough choices to help shore up the government program from weaker loans made in years past. A mortgage industry veteran is at the helm shaping the policy changes.
By Robert Stowe England
Mortgage Banking
January 2010
David H. Stevens was sworn in as assistant secretary for housing at the Department of Housing and Urban Development (HUD) and commissioner of the Federal Housing Administration (FHA) on July 15, 2009, and is responsible for overseeing the $600 billion FHA mortgage insurance portfolio and HUD’s multifamily subsidized housing program. The commissioner also oversees HUD’s regulatory responsibilities under the Real Estate Settlement Procedures Act (RESPA).
Prior to his appointment, Stevens was president and chief executive officer of the Long & Foster Companies, Inc., in Chantilly, Virginia. Further, he has an extensive background in mortgage finance. He served as executive vice president and national wholesale manager at Wells Fargo Home Mortgage in Des Moines, Iowa, and was a senior vice president in single-family business at Freddie Mac. Stevens spent 16 years at World Savings Bank, where he began his career. He is a graduate of the University of Colorado at Boulder.
Mortgage Banking caught up with Stevens at his office in the HUD building in southwest Washington, D.C., recently, where this interview was conducted.
Q: There are some who have taken to referring to the FHA lending program as “the new subprime.” How do you respond to those comments and is there any truth to that assessment?
A: I think those who refer to it as the new subprime are creating an unnecessary and irrational judgment about the FHA program. Nothing could be further from the fact. Where subprime was characterized by extremely low credit quality, adjustable mortgages, 2/28s with a fairly significant payment increase in the early period, limited or sometimes no income documentation or otherwise . . . the FHA portfolio is very different. It’s 100 percent 30-year, fully amortized fixed-rate. It’s [a] 100 percent fully [documented] mortgage portfolio. It’s a primary residence-only [mortgage portfolio]. No second homes, no investor properties, and the average credit score has risen to near 700.
An FHA loan is for shelter. The fact it’s owner-occupied, and you look at the average loan size, these loans are not for speculation or investment. And much of the subprime and alt-A product was originated either for speculative purposes or originated with no documentation or originated using variable-rate loans that didn’t amortize at all or had significant spikes in either the rate, payment or both within their early period.
FHA was only . . . at 2 1/2 percent of the mortgage market in 2007, while subprime and alt-A combined were near 50 percent of the market. This reflects the fact that FHA didn’t compete with those kinds of programs for a reason. It’s a pretty boring product--fully documented, 30-year fixed, owner-occupied, primary residence.
To read more, go this link and register at no cost to have access to all items on Mr. England's Web site:
http://robertstoweengland.com/
By Robert Stowe England
Mortgage Banking
January 2010
David H. Stevens was sworn in as assistant secretary for housing at the Department of Housing and Urban Development (HUD) and commissioner of the Federal Housing Administration (FHA) on July 15, 2009, and is responsible for overseeing the $600 billion FHA mortgage insurance portfolio and HUD’s multifamily subsidized housing program. The commissioner also oversees HUD’s regulatory responsibilities under the Real Estate Settlement Procedures Act (RESPA).
Prior to his appointment, Stevens was president and chief executive officer of the Long & Foster Companies, Inc., in Chantilly, Virginia. Further, he has an extensive background in mortgage finance. He served as executive vice president and national wholesale manager at Wells Fargo Home Mortgage in Des Moines, Iowa, and was a senior vice president in single-family business at Freddie Mac. Stevens spent 16 years at World Savings Bank, where he began his career. He is a graduate of the University of Colorado at Boulder.
Mortgage Banking caught up with Stevens at his office in the HUD building in southwest Washington, D.C., recently, where this interview was conducted.
Q: There are some who have taken to referring to the FHA lending program as “the new subprime.” How do you respond to those comments and is there any truth to that assessment?
A: I think those who refer to it as the new subprime are creating an unnecessary and irrational judgment about the FHA program. Nothing could be further from the fact. Where subprime was characterized by extremely low credit quality, adjustable mortgages, 2/28s with a fairly significant payment increase in the early period, limited or sometimes no income documentation or otherwise . . . the FHA portfolio is very different. It’s 100 percent 30-year, fully amortized fixed-rate. It’s [a] 100 percent fully [documented] mortgage portfolio. It’s a primary residence-only [mortgage portfolio]. No second homes, no investor properties, and the average credit score has risen to near 700.
An FHA loan is for shelter. The fact it’s owner-occupied, and you look at the average loan size, these loans are not for speculation or investment. And much of the subprime and alt-A product was originated either for speculative purposes or originated with no documentation or originated using variable-rate loans that didn’t amortize at all or had significant spikes in either the rate, payment or both within their early period.
FHA was only . . . at 2 1/2 percent of the mortgage market in 2007, while subprime and alt-A combined were near 50 percent of the market. This reflects the fact that FHA didn’t compete with those kinds of programs for a reason. It’s a pretty boring product--fully documented, 30-year fixed, owner-occupied, primary residence.
To read more, go this link and register at no cost to have access to all items on Mr. England's Web site:
http://robertstoweengland.com/
Comments
Post a Comment