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Housing Actions Shored Up by Stronger Finances

The improving financial health of the Federal Housing Administration, partly the result of a recovering housing market, is giving the Obama administration room to take executive actions on affordable housing.

The Federal Housing Administration will not need taxpayer assistance for the second year in a row, according to projections in President Barack Obama’s fiscal 2016 budget.

The president’s budget asks for $173 million in total discretionary spending, which would be used to implement improved risk management for the FHA’s portfolio of loans. Obama is also requesting authority from Congress to charge lenders an administrative support fee, which would generate an estimated $30 million.

As in previous years, the Department of Housing and Urban Development, which oversees the FHA, is also seeking a comprehensive set of legislative changes to strengthen the agency, including enhanced indemnification authority from lenders. Republicans have been cool to the proposal.

The agency, which insures mortgages for mostly first-time homebuyers, minorities and low-income families, has seen a relatively speedy return to solvency after taking a taxpayer infusion of $1.7 billion for the first time in its eight-decade history in 2013.

An actuarial review released in November found the value of FHA’s mortgage insurance fund had increased by $21 billion over the past two years and Obama’s budget estimates the value of the fund will continue to grow by at least $7 billion each year.

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