Loan Modification

Commissioner Stevens Leaving FHA

By Peter G. Miller

The word is out that FHA Commission David H. Stevens will be leaving his position within the next few weeks. A replacement has not been named.

Stevens was nominated to his post in March 2009 and has guided the FHA through difficult times with considerable skill.

He had the great advantage of actually having expertise in his field, not a quality to be assumed with all political appointees. Stevens’ background, according to HUD, includes having served as Executive Vice President, National Wholesale Manager at Wells Fargo Home Mortgage’s wholesale channel; Vice President of single family business at Freddie Mac; and, a 16-year tenure at the World Savings Bank, where he began his career. He was also the founding executive sponsor of the Women’s’ Mortgage Industry Network and while at Freddie Mac, he coordinated the first Latino joint venture initiative with Freddie Mac and Latino mortgage industry leaders.

The Marketplace Impact

The FHA, like all real estate and mortgage programs, has been impacted by the difficult market conditions experienced across the country. To his great credit, Stevens kept the FHA solvent, increased FHA reserves, maintained FHA loan requirement, dumped more than 1,500 lenders who did not meet FHA standards and has been an articulate spokesman for HUD, the FHA and the idea that we can prudently lend to entry-level borrowers.

One by-product of FHA success has been the ongoing clamor by the private sector to make the FHA less competitive. Unfortunately, such views have gained traction in recent months, not good news for individuals without executive bonuses.

Foreclosures

Of particular interest has been the FHA’s ability to hold down foreclosures under Stevens, a program which ought to be a model for the private sector.

There has been a lot of clamor regarding FHA delinquency rate. The Mortgage Bankers Association said the FHA mortgage delinquency level reached 12.26 percent in the fourth quarter of 2010. This compares with 5.48 percent for prime loans and 23.01 percent for subprime financing.

What’s not mentioned is the FHA cure rate.

In fiscal 2009 HUD reported that ?82.7 percent of the HUD-held loans that are 90 days or more delinquent were brought under control.?

In fiscal 2010 the cure rate dipped to 73 percent, still a terrific outcome when one considers the unemployment rate and the relative inability of the private sector to duplicate such results.

Alternatively, the Bank of America, according to the HousingWire, “recently sampled 100 mortgages reaching 60 days or more delinquent, and found that only 14 of them qualify for a permanent modification through HAMP.”

?Assuming this position and the challenges addressed since I took office have been the most intense and significant in my career,” says Stevens. “It has been my honor to serve President Obama, Secretary Donovan, and the entire Administration. I am extremely proud of everything we accomplished to put the FHA back on stable footing.?

Fair enough.

Full post as published by FHA Mortgage Guide on March 14, 2011 (boomark / email).