Federal Housing Administration

Like the old woman who lived in a shoe, Housing Secretary Henry Cisneros has a lot of remodeling to do if he is to save the beleaguered Department of Housing and Urban Development from the Republican Congress' demolition team. One of the key changes in a massive overhaul proposed by Cisneros last month calls for the 60-year-old Federal Housing Administration, now managed by HUD, to become a separate, downsized, government-owned corporation. "We are proposing to completely recast FHA," HUD Secretary Henry Cisneros told the Senate Banking, Housing and Urban Affairs subcommittee.

In the 29 months since the financial meltdown of September 2008, the Federal Housing Administration has been insuring an ever-larger share of the nation's new mortgages. Recent figures place the number at one in three. The FHA's share of the mortgage market "waxed, waned, and waxed again" with the nation's economic health between 2000 and 2009, according to a recent study by the Federal Reserve Bank of Philadelphia. In 2000, for example, the FHA's market share stood at 10.53 percent.

City, state and federal officials meeting at the Philadelphia Federal Reserve yesterday laid out plans to help homeowners facing foreclosure. Efforts include a $3.8 million program by the Philadelphia Neighborhood Transformation Initiative to shore up low-income areas with high ownership rates that have seen rapid housing-price appreciation because they are near some of the city's hot neighborhoods. Officials from the Federal Housing Administration and the Pennsylvania Housing Finance Agency talked about efforts to refinance borrowers caught in unaffordable adjustable-rate mortgages.

Law professor Alan M. White welcomed Hillary Rodham Clinton's plan to get the mortgage crisis at the center of the nation's economic slowdown under control. "The sad thing is, a lot of this needs to be done before January 2009," said White, who left Philadelphia's Community Legal Services last year to join the faculty at Valparaiso University School of Law in Indiana. Clinton's proposals include a new role for the Federal Housing Administration in restructuring troubled mortgages.

Congressional inaction has affected home mortgages guaranteed by the Veterans Administration or insured by the Federal Housing Administration. The rules governing these mortgages changed last year, but have been forced back to old procedures this year because of Congress' failure to extend the new rules. About 11 percent of all mortgages involve these federal agencies. "It's really hampering these loans," said Fred Glick, vice president of Hart Mortgage Corp., in Fort Washington.

U.S. Housing Secretary Samuel R. Pierce announced last week a number of potentially useful steps to prevent fraud in home mortgages insured by the Federal Housing Administration. They are the result of disclosures of widespread fraud in the FHA program in Camden, where real estate sales personnel, mortgage company officials, property assessors and others have been convicted of a variety of corruption charges. Similar fraud was subsequently uncovered in other cities. As a series of articles by Tim Weiner in The Inquirer in 1984 described in detail, the housing scandals in Camden were systematic and involved many players who shared in the profits.

WASHINGTON - Who is paying for the two-month extension of the payroll tax cut working its way through Congress? The cost will be dropped in the laps of most people who buy homes or refinance beginning next year. Starting Jan. 1, those who buy a $200,000 home or refinance that amount will pay roughly $17 more a month for their mortgages, thanks to a fee increase included in the bill the Senate passed Saturday. The White House said the fee increase would be phased in gradually. The legislation provides a two-month extension of the tax cut and long-term unemployment benefits that would otherwise expire on Jan. 1. It would also delay for two months a cut in Medicare reimbursements for doctors that is scheduled to take effect on New Year's Day. The House is expected to act on the bill early in the week.

Housing officials meeting in Philadelphia yesterday bemoaned the on-again, off-again status of the Federal Housing Administration, which was facing its second temporary shutdown this year. The FHA, which was forced to temporarily halt its mortgage-insurance program last month until Congress boosted the agency's lending limit by $17 billion and extended its operating authority. That extension - the third since last fall - expires tonight at midnight, unless Congress approves yet another reprieve for the agency's mortgage backing authority.

In 1966, John P. Moscony became a salesman in the real estate business founded by his late father and helped build it into one of Southwest Philadelphia's busiest home dealers. But all the good will and reputation he once said he earned has come into question. Moscony, 45, and Thomas L. Cullen Jr., 43, his chief salesman, have been indicted by a federal grand jury here for allegedly reaping more than $600,000 in profits over a six-year period by fraudulently securing federal mortgage insurance for some 95 homebuyers whom he knew to be ineligible for government- insured loans.

Housing is not the dominant theme of this year's presidential election. Actually, it's not even getting much of a mention. But then, it never does. Still, if your vote next month depends on how the candidates stand vis-a-vis housing issues, you'll have to look past their proposals to all but eliminate the capital gains tax on house sales. You'll also have to go beyond the tax deduction for mortgage interest, as well as plans to expand individual retirement accounts so they can be used to accumulate money tax-free for a down payment on a first home.

Banks and mortgage servicers expect homeowners to meet their obligations. In an economy built to last, homeowners should expect the same of them. Too often in the run-up to the housing crisis, that wasn't the case. Banks didn't hold up their end of the bargain. Lenders sold loans to people who couldn't afford them to make profits that turned out to be a mirage. Millions of families who did nothing wrong lost their homes or saw their value drop as a result. As extensive federal and state investigations found, the abuses continued after homeowners moved in. After reviewing thousands of loans insured by the Federal Housing Administration, the U.S. Department of Housing and Urban Development and its Inspector General's Office uncovered evidence that the country's five largest loan servicers routinely signed foreclosure documents without knowing whether they were accurate.

Since reporting the details of President Obama's latest housing recovery plan, I have been inundated with e-mails and calls from homeowners looking to refinance their mortgages to record low rates through the Federal Housing Administration. The volume, along with regular appeals from readers asking me to intercede for them with lenders and servicers, are proof positive the financial crisis is far from over. The problem is that Congress, including a Republican House majority hostile to the plan, has to approve it first, and that may not happen.

The housing industry has been appealing for a coherent policy that will end the market's five-year-old downturn and get real estate moving. What President Obama offered Tuesday night in his State of the Union address, though welcomed by many, does not appear to be all the industry had in mind. The President proposed to allow up to four million homeowners to refinance into loans guaranteed by the Federal Housing Administration, an action Obama said would save individuals an average of $3,000 annually.

WASHINGTON - Who is paying for the two-month extension of the payroll tax cut working its way through Congress? The cost will be dropped in the laps of most people who buy homes or refinance beginning next year. Starting Jan. 1, those who buy a $200,000 home or refinance that amount will pay roughly $17 more a month for their mortgages, thanks to a fee increase included in the bill the Senate passed Saturday. The White House said the fee increase would be phased in gradually. The legislation provides a two-month extension of the tax cut and long-term unemployment benefits that would otherwise expire on Jan. 1. It would also delay for two months a cut in Medicare reimbursements for doctors that is scheduled to take effect on New Year's Day. The House is expected to act on the bill early in the week.

Since the real estate bubble burst more than five years ago, the FHA mortgage has become a major source of home-purchase financing. As I've reported here several times, the annual share of mortgages insured by the government under the Federal Housing Administration has increased from about 3 percent during the boom years of 2005 and 2006, to 20.76 percent in 2009, to about 30 percent today. With stricter underwriting requirements and higher loan premiums, FHA's market share showed some signs of declining earlier this year, but many experts believe that it will remain about 30 percent, if not a bit more.

Philip J. Sutcliffe is a consultant who helps builders, lenders, lawyers, and homeowners associations work through the Federal Housing Administration and Fannie Mae approval processes for condo projects. Navigating the choppy waters of government bureaucracy has never been particularly easy, but Sutcliffe is finding the going slower and tougher. The problem is that the government agencies, under pressure to reduce or end taxpayer bailouts of the housing industry, are changing decades-old lending rules without letting anyone know in advance.

In the 29 months since the financial meltdown of September 2008, the Federal Housing Administration has been insuring an ever-larger share of the nation's new mortgages. Recent figures place the number at one in three. The FHA's share of the mortgage market "waxed, waned, and waxed again" with the nation's economic health between 2000 and 2009, according to a recent study by the Federal Reserve Bank of Philadelphia. In 2000, for example, the FHA's market share stood at 10.53 percent.

With some early signs that the housing market is stabilizing, HUD Secretary Shaun Donovan said yesterday that President Obama's continuing efforts to "fix a financial system that's broken" meant that the Federal Housing Administration would play an increasingly larger role in mortgages. "While we prefer to have the private market be more involved, we have asked . . . to expand our authority to provide $400 billion more for the FHA insurance program," Donovan said at a conference of real estate reporters and editors here.

Law professor Alan M. White welcomed Hillary Rodham Clinton's plan to get the mortgage crisis at the center of the nation's economic slowdown under control. "The sad thing is, a lot of this needs to be done before January 2009," said White, who left Philadelphia's Community Legal Services last year to join the faculty at Valparaiso University School of Law in Indiana. Clinton's proposals include a new role for the Federal Housing Administration in restructuring troubled mortgages.

City, state and federal officials meeting at the Philadelphia Federal Reserve yesterday laid out plans to help homeowners facing foreclosure. Efforts include a $3.8 million program by the Philadelphia Neighborhood Transformation Initiative to shore up low-income areas with high ownership rates that have seen rapid housing-price appreciation because they are near some of the city's hot neighborhoods. Officials from the Federal Housing Administration and the Pennsylvania Housing Finance Agency talked about efforts to refinance borrowers caught in unaffordable adjustable-rate mortgages.