He began his presentation with some positive statements concerning the economy, saying that “2014 was the best year for job growth since the 1990s. Over the last 59 months, businesses have created 11.8 million new jobs — the longest streak of private sector job growth on record. And in recent years we’ve seen existing single-family home sales rise 50 percent, housing starts double, and home equity grow by more than $4 trillion.”
Castro stated it’s clear that housing is reemerging as an engine of economic prosperity and that the Federal Housing Administration has been instrumental in this progress. “The FHA has provided access to credit for generations of underserved borrowers and has been a stabilizing force in the housing market,” he said.
But then he offered another viewpoint. “Unfortunately, there are some who try to include FHA with all the bad actors that caused the housing crisis. That could not be more wrong,” he explained. “FHA never pushed the toxic products that did so much damage. It didn’t bring down the market — it saved it.”
He pointed out that FHA both stepped in and stepped up to fill the void created when private capital retreated — actions that independent economists say prevented a further collapse in home prices. “And now that our nation has turned the page on the crisis, we have a responsibility to give more Americans the chance to participate in this growth,” Castro explained.
In order to do this, he said that last month FHA took action to restore some fairness in the market and to make homeownership more affordable for working families by reducing annual mortgage insurance premiums by a modest half a percentage point. “We expect this to save more than 2 million households more than $2 billion during the next three years,” he explained. “That’s money that can now be used on everything from a child’s education to retirement savings. It will also encourage more than 250,000 new borrowers to enter the market, and create tens of thousands of jobs.”
For those who worry that the reduction in mortgage insurance rates might deplete the Mutual Mortgage Insurance Fund, Castro assured them that the Fund has a net worth of $4.8 billion according to the independent actuary’s most recent annual report to Congress. “It’s grown more than $21 billion in just two years,” Castro explained. “Even with the reduction, premiums are still 50% higher than pre-crisis levels.”
In addition, he said that the expectation is that the Fund will grow by at least $7 billion annually over the next several years, and exceed the 2 percent ratio within 2 years. “Our loans will still represent quality because our underwriting standards ensure that we’re lending to responsible borrowers,” he stated. ##
(Photo Credit: HUD)
Article submitted by Sandra Lane to – Daily Business News – MHProNews.
