Rethinking the FHA
The Federal Housing Administration (FHA) has failed by any reasonable metric. Not only is its main mortgage insurance guarantee fund insolvent in the sense that it does not have sufficient capital resources to cover expected losses, but it is also failing far too many of its intended program beneficiaries in helping them achieve sustainable homeownership. These twin financial and policy failures call for a fundamental rethinking of how we might better achieve FHA’s mission to help first-time homebuyers and financially constrained households make minimal down payments. This report argues that phasing out FHA over a period of years and replacing it with a new subsidized savings program for these households is far better than trying to reform FHA.