Lower FHA Premiums (1/20/15)

This letter appeared  in the “Letters to the Editor” of The Washington Post on January 20, 2015.

by Scott Olson

On behalf of the Community Home Lenders Association (CHLA), the first national association to call for lower FHA premiums, we write to respond to your editorial.

The main beneficiaries of lower premiums are not “bankers and real estate agents” – but the 375,000 renters who were priced out of buying a home last year by excessive FHA premiums. Moreover, this is not an “additional risk” – FHA is not lowering underwriting standards or down payments, just pricing loans at levels that still make a profit, just a slightly lower one. New FHA loans are safer than ever – average FICO scores have soared and seriously delinquent default rates on recent vintage loans have fallen to 1%.

The Post is right to point to the need to build up FHA capital – but this will happen with or without a premium cut. The issue is whether FHA also pays attention to its mission of providing affordable mortgage loans. The CHLA believes FHA can do both.