If it ain't broke, don't fix it. That's the message being sent by FHA Commissioner William Apgar to Rep. Rick Lazio, R-N.Y., who has proposed merging the Federal Housing Administration with the Government National Mortgage Association, taking them out of the Department of Housing and Urban Development and turning them into a separate corporation. And Apgar's argument is bolstered by a new independent study that found the FHA's mutual mortgage insurance fund is in its best shape since it was created in 1934. The economic value is defined as the sum of existing capital plus the value of current insurance in force. The report also says the FHA's capital adequacy ratio is 3.66 percent, far in excess of the Congressionally mandated goal of 2 percent.
Capital adequacy is the economic value of the fund divided by the total insurance in force.
The FHA has enabled some 30 million families to qualify for mortgages since its inception by insuring the loans against default, thereby protecting lenders from losses. Ginnie Mae guarantees securities issued by private lenders that are backed by pools of FHA-insured mortgages. Very few government programs can say they accomplish so much with costing taxpayers a penny. But that wasn't always the case. Lew Sichelman has been covering real estate from his home base in the Nation's Capital for more than 30 years.